Market Post: Focus Turns to Primary as Pricing Begins

The tax-exempt market turned its attention to the primary market Tuesday as new issues started pricing.

Traders said the market is looking at a lot of little deals to hit the market to set the tone for the week.

So far, munis were steady in Tuesday trading, according to the Municipal Market Data scale. On Monday, the 10-year tax-exempt yield jumped two basis points to 1.66%, hovering above its record low of 1.60% set Thursday. The 30-year muni yield finished flat at 2.84%, five basis points above its record low of 2.79% set Wednesday. The two-year was steady at 0.29% for the third consecutive session.

Treasuries weakened and erased all gains after firming in the morning. The benchmark 10-year yield rose one basis point to 1.51% while the 30-year yield increased two basis points to 2.59%. The two-year was steady at 0.23%.

In the primary market Tuesday, Barclays Capital priced for retail $420 million of California State University Trustees system-wide revenue bonds, rated Aa2 by Moody's Investors Service and A-plus by Standard & Poor's.

Yields ranged from 0.24% with a 2% coupon in 2013 to 3.85% with a 3.75% coupon in 2042. Bonds maturing in 2026, in between 2028 and 2031, and in 2037 were not offered for retail. The bonds are callable at par in 2022.

Morgan Stanley priced for retail $350 million of Fairfax County, Va., Industrial Development Authority health care revenue bonds for the Inova Health System. The bonds are rated Aa2 by Moody's and AA-plus by Standard & Poor's.

Yields on the first series of $290 million ranged from 0.50% with a 3% coupon in 2014 to 4.10% with a 4% coupon in 2042. Bonds maturing in 2013 were offered via sealed bid. Portions of credits maturing in 2042 were not offered for retail. The bonds are callable at par in 2022.

Bonds on the second series of $60 million yielded 2.46% with 3%, 4%, and 5% coupons in a split 2022 maturity. Portions of credits maturing in 2022 were not offered for retail.