The tax-exempt market has increasingly been described as bifurcated this week as the tone in the primary market feels strong while the secondary market is weaker.
Traders said that new issues have been received extremely well so far this week but that bids are lower in the secondary.
“It’s exactly that,” a New York trader said, referring to primary deals being received very well while the secondary followed Treasuries lower. “The Wisconsin competitive deal is going very well.”
Others agreed. “There are a few new issues keeping us busy,” a New Jersey trader said. “As far as last week goes we were looking at the Dormitory Authority of the State of New York PIT bonds and those are trading a little weaker in odd lots. The New York Metropolitan Transportation Authority deal that came earlier this week looks OK in the secondary.”
The trader said the bid side was weaker Wednesday than it was Tuesday. “The market is a few basis points weaker, but nothing extreme.”
In the primary market, Loop Capital Markets priced for retail $600.7 million of California State Public Works Board lease revenue bonds, rated A2 by Moody’s Investors Service and BBB-plus by Standard & Poor’s and Fitch Ratings. Institutional pricing is expected Thursday.
Yields on the first series, $459.3 million of lease revenue bonds for various capital projects, ranged from 0.91% with a 4% coupon in 2015 to 3.63% with a 4% coupon in 2032. Bonds maturing between 2025 and 2031 and in 2037 were not offered for retail. The bonds are callable at par in 2022.
Yields on the second series, $53.6 million of lease revenue bonds for Riverside Campus projects, ranged from 1.14% with a 3% coupon in 2016 to 4.05% with a 4% coupon in 2037. The bonds are callable at par in 2022.
The third series, $67.2 million of lease revenue refunding bonds for the California State Prison in Lassen County, Susanville, were not offered for retail.
The fourth series, $20.6 million of lease revenue refunding bonds for the Richmond Laboratory project, yielded 0.75% with a 3% coupon in 2014 and 0.91% with a 4% coupon in 2015. Credits maturing in 2013 were not offered for retail.
Barclays priced and repriced $211.3 million of Pennsylvania Turnpike Commission turnpike subordinate revenue bonds following a retail order period Tuesday.
The first series, $118.1 million of turnpike subordinate revenue bonds, is rated A3 by Moody’s and A-minus by Standard & Poor’s and Fitch. Yields ranged from 0.75% with a 3% coupon in 2014 to 3.65% with a 5% coupon in 2042. Credits maturing in 2013 were offered via sealed bid. The bonds are callable at par in 2022.
The second series, $93.2 million of motor license fund-enhanced turnpike subordinate special revenue bonds, are rated A1 by Moody’s and AA by Standard & Poor’s. Yields ranged from 0.55% with a 3% coupon in 2014 to 3.53% with a 5% coupon in 2042. The bonds are callable at par in 2022.
On Wednesday, the 10-year Municipal Market Data yield and the 30-year yield jumped three basis points each to 1.74% and 2.86%, respectively. The two-year was steady at 0.30% for the 16th consecutive trading session.
Treasuries closed much lower. The benchmark 10-year yield soared nine basis points to 1.81% while the 30-year yield spiked up seven basis points to 2.99%. The two-year yield jumped three basis points to 0.30%.
In other primary market news, JPMorgan priced $222.3 million of Utah County hospital revenue bonds on behalf of the IHC Health Services, rated Aa1 by Moody’s and AA-plus by Standard & Poor’s. Yields ranged from 2.03% with a 2.75% coupon in 2021 to 3.38% with a 5% coupon in 2043. The bonds are callable at par in 2021.
In the competitive market, Wells Fargo Securities bought $293.1 million of Wisconsin general obligation bonds, rated Aa2 by Moody’s and AA by Standard & Poor’s and Fitch. The bonds yielded 1.85% with a 5% coupon in 2022 and 1.95% with a 5% coupon in 2023. Credits maturing between 2024 and 2033 were not formally re-offered.
In the secondary market, trades compiled by data provider Markit showed mostly weakening. Yields on New York City Municipal Water Finance Authority 5s of 2045 jumped four basis points to 3.26% while Massachusetts 5.25s of 2022 increased two basis points to 1.93%.
Yields on Pennsylvania 5s of 2022 and California’s Bay Area Toll Authority 4s of 2031 rose two basis points each to 1.88% and 2.92%, respectively.