The tax-exempt market continued to head lower Thursday afternoon after a big selloff Wednesday, prompting issuers to postpone deals.
California Health Facilities Financing Authority was expected to issue nearly $800 million of new money and refunding bonds and postponed the sale due to market conditions. New York’s Metropolitan Transportation Authority postponed its institutional pricing following a retail order period Wednesday.
"Based on market conditions, the issuer has decided to put the transaction on day to day status,” RBC Capital Market said in a statement. “As such, all orders entered during the retail order period are released. The syndicate will be notified of the time frame the issuer will utilize to enter the market."
Traders said the selloff was starting to make munis look attractive. “Lower rated credits like Detroit and Puerto Rico are pretty loose now,” a New Jersey trader said. “The stronger credits are more defensive and more stable. There is more of a shakeup with the junk stuff.”
“Clients call me up and tell me they want to see and it’s a perfect example of the general public panicking,” he added.
A few deals did continue to price in the primary. Jefferies & Co. priced $376.7 million of Dallas-Fort Worth International Airport joint revenue improvement bonds, subject to the alternative minimum tax. The bonds are rated A2 by Moody’s Investors Service, A-plus by Standard & Poor’s and A by Fitch Ratings.
Yields ranged from 4.15% with a 5.25% coupon in 2026 to 4.75% with a 4.75% coupon in 2045. The bonds are callable at par in 2022.
In the competitive market, Bank of America Merrill Lynch won the bid for $154.1 million of Anne Arundel County, Md., GOs, rated Aa1 by Moody’s and AAA by Standard & Poor’s.
Yields on the first series, $116 million of consolidated general improvement bonds, ranged from 0.19% with a 4% coupon in 2014 to 3.76% with a 5% coupon in 2033. The bonds are callable at par in 2023.
Yields on the second series, $38.1 million of consolidated water and sewer bonds, ranged from 0.19% with a 4% coupon in 2014 to 4.58% with a 4.5% coupon in 2043. The bonds are callable at par in 2023.
Wednesday, yields on the Municipal Market Data scale ended as much as five basis points higher. The 10-year yield increased four basis point to 2.28% and the 30-year yield rose five basis points to 3.58%. The two-year yield rose one basis point to 0.32%.
Yields on the Municipal Market Advisors 5% scale closed as much as six basis points higher. The 10-year and 30-year yields rose five basis points each to 2.39% and 3.69%, respectively. The two-year was steady at 0.39% for the second session.
Treasuries continued to head much lower in price and higher in yield Thursday afternoon. The benchmark 10-year yield jumped 11 basis points to 2.44% and the 30-year yield increased 14 basis points to 3.55%. The two-year yield rose three basis points to 0.34%.
In retail size trading, or those trades under 100 bonds, activity rose this week and was the highest in five weeks, according to BondDesk Group.
There were 78,327 buy trades for the week ending June 19, up from the previous week’s 73,797 buy trades. The number of buy trades has increased for the third consecutive week.
Sell trades also increased for the third week and were the highest in five week. There were 43,583 sell trades, up from the previous week’s 42,353 trades.
The ratio of buy to sell trades rose to 1.8 from 1.7.
Par value of trades also rose for the third week and was the highest in five. There were $2.085 billion buy trades for the week ending June 19, up from $1.154 billion buy trades the previous week.
Sell trades increased to $1.154 billion from $1.128 billion. The ratio of buy to sell trades in par value increased to 1.8 from 1.7.
