After steady to weaker trading Tuesday and Wednesday, the tax-exempt market ended on a firmer tone Thursday as bonds in the secondary traded higher.
Market participants said the tone towards the end of the week was much more constructive coming off a primary market earlier in the week where deals came with concessions.
“The market seems firmer today,” a New Jersey trader said. “There is still sporadic retail trading and there is not much secondary movement, but the market is relatively firm today.”
The market felt two to four basis points stronger, according to the trader.
He added that the $435 million New York City Municipal Water Finance Authority bonds that priced Wednesday traded higher in the secondary Thursday. “The water bonds traded up today.”
The pickup in activity in the afternoon was a welcome change from a relatively quiet morning session.
“This market is quiet, but even though there’s not panic, it’s possible to grab a cheap bond here or there,” a Chicago trader said, adding the small selloff had provided a buying opportunity.
In the primary market Thursday, Bank of America Merrill Lynch priced for institutions $527.3 million of Los Angeles Department of Water and Power revenue bonds, rated Aa3 by Moody’s Investors Service and AA-minus by Standard & Poor’s and Fitch Ratings.
Yields ranged from 0.41% with a 1% coupon in 2015 to 3.10% with a 3% coupon in 2031. Bonds maturing in 2013 and 2014 were offered via sealed bid. The bonds are callable at par in 2023.
Morgan Stanley priced $181.8 million of Board of Governors of the Colorado State University System enterprise revenue and revenue refunding bonds, rated Aa2 by Moody’s and AA-minus by Standard & Poor’s guaranteed by the Higher Education Revenue Bond Intercept Program.
Yields ranged from 0.27% with a 1% coupon in 2014 to 3.69% with a 5% coupon in 2043.
Goldman, Sachs & Co. priced $176.7 million of Tarrant County Cultural Education Facilities Finance Corp. hospital revenue bonds, rated A1 by Moody’s, A by Standard & Poor’s, and AA-minus by Fitch.
Yields ranged from 0.70% with a 5% coupon in 2015 to 4.10% with a 4% coupon and 3.78% with a 5% coupon in a split 2043 maturity. The bonds are callable at par in 2023.
Morgan Stanley priced $104.9 million of New York City Housing Development Corp. multi-family housing revenue bonds, rated Aa2 by Moody’s and AA by Standard & Poor’s.
Bonds in the first series, $102.8 million, were priced at par to yield from 0.30% and 0.35% in a split 2013 maturity to 4.00% in 2044. The bonds are callable at par in 2022.
Bonds in the second series, $2.1 million subject to the alternative minimum tax, were priced at par to yield from 2.30% and 2.35% in a split 2019 maturity to 3.60% in 2026. The bonds are callable at par in 2022.
In the competitive market, JPMorgan won the bid for $225 million of triple-A rated Delaware GOs. Yields ranged from 0.16% with a 2% coupon in 2014 to 2.93% with a 3% coupon in 2033. The bonds are callable at par in 2021.
RBC Capital Markets won the bid for $146.6 million of New York’s Nassau County GOs, rated A2 by Moody’s and A-plus by Standard & Poor’s and Fitch. Prices were not yet available.
In the secondary market, trades compiled by data provider Markit showed a mix of strengthening and weakening.
Yields on New Jersey Economic Development Authority 5s of 2030 fell two basis points to 3.11%. Yields on California 4s of 2026 and San Francisco Airports Commission 3.696s of 2020 fell one basis point each to 2.75% and 2.33%, respectively.
Other trades were weaker. Yields on Dormitory Authority of the State of New York 5s of 2019 rose two basis points to 1.58%.
Yields on Miami-Dade County, Fla., 5s of 2029 and Harris County, Texas, Flood Control District 5.25s of 2018 rose two basis points each to 1.26% and 1.09%, respectively.
On Thursday, municipal bond market scales finished stronger after posting losses Wednesday.
Yields on the Municipal Market Data triple-A GO scale fell as much as two basis points across the curve. The 30-year yield fell two basis points to 2.94%. The 10-year was flat at 1.90% for the second session while the two-year closed steady at 0.31% for the third session.
Yields on the Municipal Market Advisors 5% coupon triple-A benchmark scale ended flat to one basis point lower. The 30-year yield fell one basis point to 3.02%. The 10-year closed flat at 1.90% for the second session while the two-year closed unchanged at 0.35% for the 18th session.
Treasuries ended stronger Thursday for the second session. The benchmark 10-year yield fell four basis points to 1.98% while the 30-year yield dropped three basis points to 3.17%. The two-year yield fell one basis point to 0.26%.