NEW YORK – Activity in the tax-exempt market is picking up as the deals that have priced have gone well and buyers wait anxiously for the rest.
“There is a little bit more action out there today with the market stabilizing after the past three trading sessions,” a New York trader said.
He added it’s hard to tell how the big deals will be received Tuesday until after all of them are priced. “But with that being said, the New York City Municipal Water Financing Authority deal has been well received thus far. Clearly demand is still out there. People seem to be gravitating toward the 4% coupon to avoid extremely high premiums.”
Munis were mixed with the yield curve flattening, according to the Municipal Market Data scale. Yields inside four years were steady. The five-year yield increased one basis point while the six-year and seven-year yields were steady. The eight- to 10-year yields rose one and two basis points while the 11-year to 26-year yields were steady. Outside 27 years, yields fell one basis point.
On Monday, the 10-year finished up four basis points to 1.87% and the 30-year yield rose three basis points to 3.37%. The two-year closed steady at 0.35% for its seventh consecutive trading session.
Treasuries continued to trade steady. The two-year and benchmark 10-year yields were flat at 0.25% and 2.07%. The 30-year yield rose one basis point to 3.16%.
In the primary market Goldman, Sachs & Co. priced $402 million of Florida’s JEA water and sewer system revenue bonds – the biggest deal of the week. The debt is rated Aa2 by Moody’s Investors Service, AA-minus by Standard & Poor’s, and AA by Fitch Ratings. Pricing information was not available by press time.
Ramirez & Co. priced for institutions $400 million of New York City Municipal Water Financing Authority water and sewer system second-general resolution revenue bonds following the retail order period Monday. The bonds are rated Aa2 by Moody’s and AA-plus by Standard & Poor’s and Fitch. Pricing details were not yet available.
Also on Tuesday, Goldman priced $190 million of University of Chicago taxable fixed rate bonds, rated Aa1 by Moody’s, AA by Standard & Poor’s, and AA-plus by Fitch. Details were not available.
In the competitive market, triple-A rated Wake County, N.C., auctioned $176.2 million of general obligation bonds in two pricings.
Bank of America Merrill Lynch won the bid for the $96.8 million deal. Yields ranged from 1.50% with a 5% coupon in 2019 to 3.16% with a 3% coupon in 2031. Bonds maturing between 2013 and 2019 and between 2023 and 2029 were sold but not available. Debt maturing between 2013 and 2022 are not callable. Credits maturing between 2023 and 2031 are callable at par in 2022.
JPMorgan won the $79.4 million deal. Details were not available.