NEW YORK - It was another record-setting day in the municipal market Wednesday, as 10-year municipal yields declined to an all-time low yet again, while 30-year munis matched their record low.
Traders said tax-exempt yields were about two or three basis points lower Wednesday, amid light to moderate secondary trading activity.
"There wasn't a ton of trading today, but there's obviously a firmer tone out there that's been carrying for quite some time," a trader in Los Angeles said. "Obviously, we must be if we're hitting record lows almost daily in the 10-year sector. It's just a really firm market right now, but until there's a real infusion of supply in here or there's some data that comes along to change things, there's no reason why this won't continue for the next little while."
"We're a couple ticks better," a trader in New York said. "More of the same. Decent activity, but we're definitely still feeling firmer."
The Municipal Market Data triple-A scale yielded a record-low 2.32% in 10 years and 3.44% in 20 years Wednesday, following levels of 2.36% and 3.47% Tuesday. The scale yielded 3.81% in 30 years Wednesday, following 3.83% Tuesday.
While 10-year munis keep setting historical lows, Wednesday marked the first time during this rally that 30-year munis reached their record low. Wednesday's 3.81% level matches the low set on Oct. 2, 2009.
Additionally, 20-year tax-exempts are on the verge of making history. Wednesday's level of 3.44% is just one basis point higher than the all-time low of 3.43%, also set on Oct. 2, 2009.
Wednesday's triple-A muni scale in 10 years was at 87.9% of comparable Treasuries and 30-year munis were at 102.1%, according to MMD, while 30-year tax-exempt triple-A general obligation bonds were at 113.1% of the comparable London Interbank Offered Rate.
The Treasury market was mixed Wednesday. The benchmark 10-year note was quoted recently at 2.65% after opening at 2.63%. The 30-year bond was quoted recently at 3.74% after opening at 3.77%. The two-year note was quoted recently at 0.51% after also opening at 0.51%.
In the new-issue market Tuesday, Massachusetts competitively sold $1.7 billion of debt over five series.
The $425 million Series B GO revenue anticipation notes were sold to various bidders.
JPMorgan won the largest total amount, $325 million, plus the largest individual piece, worth $200 million, with an effective rate of 0.23%. The $125 million chunk was won with an effective rate of 0.25%.
TD Securities won the two remaining pieces, worth $50 million each, with effective rates of 0.23% and 0.21%.
The $425 million Series C GO Rans were also sold to various bidders.
The largest chunk of the deal, worth $150 million, went to Wells Fargo Securities with an effective rate of 0.245%.
Goldman, Sachs & Co. and JPMorgan each won a $91.67 million piece, both with effective rates of 0.249%.
Also, Morgan Keegan & Co. and RBC Capital Markets each won a $45.83 million component, both with effective rates of 0.249%.
A $358 million series of taxable Build America Bonds was sold to Citi with a true interest cost of 4.53%.
The BABs mature in 2031, yielding 4.50% priced at par, or 2.93% after the 35% federal subsidy. The bonds were priced to yield 80 basis points over 30-year Treasuries.
A $350 million series of GO Rans was sold to Goldman Sachs with an effective rate of 0.23%.
Additionally, the commonwealth sold $150 million of GO Rans to Wells Fargo.
The Rans mature in June 2011 with a 2% coupon and were not formally re-offered.
Massachusetts' short-term credit is rated MIG-1 by Moody's Investors Service, SP-1-plus by Standard & Poor's, and F1-plus by Fitch Ratings. The commonwealth's long-term debt is rated Aa1 by Moody's and AA by Standard & Poor's.
JPMorgan priced $467.6 million of taxable funding notes for the Kentucky Asset/Liability Commission.
The notes mature in 2011, 2012, and from 2018 through 2020. Yields range from 0.84% in 2011 to 4.20% in 2020, all priced at par. They were priced to yield between 60 and 175 basis points over the comparable Treasury yields, and contain a make-whole call at Treasuries plus 25 basis points.
The credit is rated Aa2 by Moody's Investors Service, A-plus by Standard & Poor's, and AA-minus by Fitch Ratings.
Also in the competitive market, Wisconsin sold $456.4 million of taxable and tax-exempt debt in two series.
Bonds from the $309.7 million series of taxable BABs mature were sold to Barclays Capital, with a TIC of 4.64%.
The BABs mature from 2020 through 2026, with term bonds in 2032 and 2041. Yields range from 3.45% priced at par in 2020, or 2.24% after the 35% federal subsidy, to 5.11% with a 5.1% coupon in 2041, or 3.32% after the subsidy.
Bonds from the $146.7 million series of tax-exempt GO debt were sold to JPMorgan, with a TIC of 1.72%.
The bonds mature from 2012 through 2019, with yields ranging from 0.43% with a 5% coupon in 2012 to 2.25% with a 4% coupon in 2019.
The bonds, which are not callable, are rated Aa2 by Moody's and AA by both Standard & Poor's and Fitch.
Also, Goldman Sachs priced $394.3 million of second lien revenue bonds for Louisiana.
The bonds mature from 2013 through 2040 with a term bond in 2045. Yields range from 0.60% with a 5% coupon in 2013 to 4.35% with a 5% coupon in 2045.
The bonds, which are callable at par in 2020, are rated Aa2 by Moody's and AA by Standard & Poor's.
The economic calendar was light Wednesday.
Visible Supply
The Bond Buyer's 30-day visible supply fell $1.250 billion to $8.989 billion. The total is comprised of $2.054 billion of competitive bonds and $6.935 billion of negotiated bonds.
Previous Session's Activity
The Municipal Securities Rulemaking Board reported 42,195 trades of 15,114 issues for volume of $11.38 billion. Most active was Florida Hurricane Catastrophe Fund 5s of 2016 that traded 158 times at a high of 110.038 and a low of 109.366.
