NEW YORK – The tax-exempt market handled very well what could turn out to be one of the year’s largest weeks of new issuance.

Traders said that while the bonds were priced to go, there are some balances that remain and need to get bought if yields expect to stay at these levels.

“It was the biggest issuance week of the year and there was support,” a Chicago trader said. “But there are a lot of bonds around though so it’s dangerous. Things were received well and priced properly this week, but with that being said I thought we were set to outperform, and we didn’t. So spreads could continue to widen and bonds get cheaper in order to move those balances.”

Munis continued to strengthen Thursday afternoon, according to the Municipal Market Data scale. Yields inside six years were steady while yields outside seven years fell as much as three basis points.

On Wednesday, The 10-year and the 30-year yields each fell two basis points to 1.89% and 3.18%, respectively. The two-year was steady at 0.32% for the ninth straight session.

Treasuries were weaker after a choppy week. The benchmark 10-year yield jumped three basis points to 1.63% while the 30-year yield increased two basis points to 2.73%. The two-year was steady at 0.30%.

In the negotiated market, Bank of America Merrill Lynch priced $162.1 million of Berks County, Pa., Municipal Authority fixed rate revenue bonds for the Reading Hospital and Medical Center Project, rated Aa3 by Moody’s Investors Service, AA by Standard & Poor’s, and AA-minus by Fitch Ratings.

The bonds yielded 4.23% with a 5% coupon in 2040, 4.50% with 4.25% and 4.5% coupons in a split 2041 maturity, and 4.28% with a 5% coupon in 2044. The bonds are callable at par in 2022.

In the competitive market, JPMorgan won the bid for $103 million of San Diego tax and revenue anticipation notes, rated M1G-1 by Moody’s and SP-1-plus by Standard & Poor’s. The notes yielded 0.17% with a 2.5% coupon.

 

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