The tax-exempt market traded steady to slightly weaker Wednesday afternoon as market participants said new deals were received fairly well and balances left over were moving in the secondary market.

"The market is adjusting to new competitive issues," said Steve McLaughlin, senior fixed-income portfolio manager at Granite Springs. "Supply is light this week and so it's mostly interdealer business. But the balances on new deals are moving and getting hit very well."

Overall, the market feels about one to two basis points weaker, he added. "Everyone is hung up on if it's one or two basis points lower but the market doesn't have much direction due to seasonal factors. The new issue market is slow and D.C. is still addressing the cap on tax-exemption."

And with yield so low, buyers remain cautious, McLaughlin said. "When the market is at low nominal yields, you are always cautious. It's tougher to find value."

In the primary, Goldman, Sachs & Co. is expected to price $335 million of Johns Hopkins University taxable bonds.

In the competitive market, Bank of America Merrill Lynch won the bid for $236.5 million of triple-A rated Virginia general obligation bonds.

Yields on the first series of $17 million, ranged from 0.25% with a 2% coupon in 2014 to 3.00% with a 3% coupon in 2033. The bonds are callable at par in 2023.

Yields on the second series, $219.5 million of refunding bonds, ranged from 0.53% with a 5% coupon in 2016 to 2.75% with a 3% coupon in 2030. The bonds are callable at par in 2023.

Morgan Stanley won the bid for $212.8 million of Victor Valley Union High School District, Calif., general obligation capital appreciation bonds, rated A-minus by Standard & Poor's.

The bonds had a yield to maturity of from 1.25% in 2015 to 5.84% in 2052. The credits are callable at par in 2023.

B of A Merrill won the bid for $165 million of Maryland Department of Transportation consolidated revenue bonds, rated Aa1 by Moody's and AAA by Standard & Poor's. Pricing details were not yet available.

On Tuesday, municipal bond market reads finished steady to weaker.

The Municipal Market Data triple-A GO scale ended steady to two basis points weaker. The 10-year yield rose one basis point to 1.81% while the 30-year yield increased two basis points to 2.88%. The two-year was steady at 0.32% for the second session.

The Municipal Market Advisors 5% coupon triple-A benchmark scale ended steady to one basis point higher. The 10-year and 30-year yields rose one basis point each to 1.84% and 2.95%, respectively. The two-year closed unchanged at 0.35% for the 12th session.

Treasuries continued to weaken Wednesday. The benchmark 10-year yield and the 30-year yield jumped four basis points each to 2.02% and 3.23%, respectively. The two-year was steady at 0.28%.

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