NEW YORK – The tax-exempt market ended on a strong note Wednesday, following Treasuries, after a steady to slightly firmer tone earlier in the week.

Deals in the primary market were moved up a day and upsized to take advantage of interest.

“I’m not sure it’s much firmer, but it’s definitely feeling better,” a Los Angeles trader said. “We are getting more things done and customers have more interest today.”

He added that a few factors come into play on why munis are firming. “Govies are up on the long end and that’s helping and there is not a lot of supply which is also helping. So we are seeing offerings being lifted.”

Another trader agreed. “Munis are stronger by a few basis points,” a New York trader said. “They have to keep up with Treasuries.

Yields inside five years were steady while six- to 13-year yields fell one to two basis points, according to the Municipal Market Data scale. Outside 14 years, yields fell three and four basis points.

On Wednesday, the two-year yield closed flat at 0.31% for the 11th consecutive trading session. The 10-year yield dropped two basis points to 1.85% while the 30-year fell three basis points to 3.22%.

Treasuries were stronger. The benchmark 10-year yield fell three basis points to 1.92% while the 30-year yield dropped four basis points to 3.11%. The two-year yield was steady at 0.28%.

In the primary market, Citi priced for institutions $506.1 million of Louisiana gasoline and fuels tax revenue refunding bonds, rated Aa1 by Moody’s Investors Service and AA-minus by Standard & Poor’s and Fitch Ratings. Pricing details were not yet available.

In retail pricing Tuesday, yields ranged from 0.46% with a 3% coupon in 2014 to 2.53% with 4% and 5% coupons in a split 2024 maturity. Credits maturing in 2013 were offered via sealed bid. Bonds maturing between 2025 and 2032 were not offered for retail. The bonds are callable at par in 2022.

Barclays Capital held preliminary pricing for $316.3 million of District of Columbia income tax-secured revenue refunding bonds, following a retail order period in the morning. The debt is rated Aa1 by Moody’s, AAA by Standard & Poor’s and AA-plus by Fitch.

Yields on the first series, $260.3 million of income tax secured revenue bonds, ranged from 0.33% with a 3% coupon in 2013 to 2.81% with a 5% coupon in 2027. Bonds maturing in 2012 were offered via sealed bid. The bonds are callable at par in 2022.

Bonds on the $56 million second series yielded 2.46% with a 5% coupon in 2025, 2.57% with a 5% coupon in 2026, and 2.66% with a 5% coupon in 2027. The bonds are callable at par in 2022.

JPMorgan priced for retail New York’s Metropolitan Transportation Authority revenue refunding bonds, rated A2 by Moody’s and A by Standard & Poor’s and Fitch. Prices were not available by press time.

In the competitive market, Seattle, Wash., auctioned $126.6 million of general obligation bonds in two pricings – a $76.7 million deal and $49.9 million – rated triple-A by the three rating agencies.

JPMorgan won the bid for the $76.7 million deal. Prices were not available.

Morgan Stanley won the bid for the $49.9 million auction. Yields ranged from 0.28% with a 3% coupon in 2013 to 1.78% with a 5% coupon in 2021. Credits maturing in 2012 were not formally reoffered.

In the secondary market, trades reported by the Municipal Securities Rulemaking Board showed firming.

Bonds from an interdealer trade of Kentucky Economic Development Finance Authority 5s of 2042 yielded 4.18%, eight basis points lower than where they traded Tuesday. A dealer sold to a customer Virginia Small Business Financing Authority 5.5s of 2042 at 5.04%, seven basis points lower than where they traded Tuesday.

A dealer bought from a customer Puerto Rico Electric Power Authority 5s of 2042 at 4.92%, seven basis points lower than where they traded Tuesday. Bonds from an interdealer trade of University of Texas 5s of 2037 yielded 2.16%, three basis points lower than where they traded last Thursday.

Elsewhere in the secondary, trades showed firming with yields falling one to four basis points on a sample of CUSIP numbers compiled by data provider Markit.

Yields on California 5s of 2020 fell four basis points to 2.24% while Columbus, Ohio, 5s of 2020 fell three basis points to 1.68%.

Yields on the City and County of Honolulu 5s of 2023 dropped two basis points to 2.29% and Florida State Board of Education 5s of 2025 also dropped two basis points to 2.61%.

The strong tone in the primary market this week was set by the $1.8 billion Illinois general obligation deal, priced Tuesday by Jefferies & Co. Bankers on the deal said there were $5.3 billion orders placed by close to 100 investors.

“There was pretty broad demand across the curve but the book was heavily oversubscribed in 10-years and longer,” said Roy Carlberg, head of municipal syndicate at Jefferies, adding the biggest price improvements came outside the 2025 maturity. On the long end, yields were lower up to nine basis points in repricing.

Carlberg said the transaction was institutionally driven, but Jefferies did make the effort to add maturities that were more attractive to retail. “We carved out 2016, 2019 and 2025 specifically for retail, but at the end of the day the deal required institutional support.”

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