A flood of borrowers tapped the primary market Tuesday, taking advantage of a calm period following Friday's selloff and weakening Monday.
Some of the largest deals of the week priced Tuesday, including $634.1 million of California Health Facilities Financing Authority revenue bonds for the St. Joseph Health System, priced by Morgan Stanley. The bonds are rated A1 by Moody's Investors Service and AA-minus by Standard & Poor's and Fitch Ratings.
Yields on the $334.1 million part ranged from 3.46% with a 4% coupon in 2021 to 5.15% with a 5% coupon in 2037. The bonds are callable at par in 2023.
The remaining $300 million was divided into three series.
The first series of $100 million was priced 85 basis points above Monday's Municipal Market Data scale with a 5% coupon maturing in 2043. The bonds have a mandatory put date in 2017.
The second series of $100 million was priced 95 basis points above the MMD scale with a 5% coupon in 2032. The bonds have a mandatory put date in 2019.
The third series of $100 million was priced 100 basis points above MMD with a 5% coupon in 2043 with a mandatory put date in 2020.
Even with several issuers tapping the market, traders weren't concerned about overwhelming supply. "I think some deals will have more demand than others," a New York trader said. "St. Joe's is priced so cheap and it only had an order period until 10:45 a.m. People were showing a lot of interest in it so I will not be surprised if the prices on that get bumped."
Monday, yields on the Municipal Market Data scale ended as much as seven basis points higher. The 10-year yield increased five basis points to 2.71% and the 30-year yield rose one basis point to 3.96%. The two-year was steady for the second session at 0.52%.
Yields on the Municipal Market Advisors scale also ended as much as seven basis points higher. The 10-year yield rose six basis points to 2.88%. The two-year and 30-year yields increased one basis point each to 0.56% and 4.08%, respectively.
Treasuries were mixed Tuesday morning. The benchmark 10-year yield fell one basis point to 2.63% and the 30-year yield rose one basis point to 3.64%. The two-year was steady at 0.36%.