NEW YORK – The tax-exempt market is beginning to deaden before the holidays as trading activity slows in the secondary.
“I hate to say it, but it’s starting to feel like the end of the year,” said a trader in New York. “It’s getting sluggish.”
He added the secondary is still moving, but “it feels like they are trying to get trades done this week because next week is going to be a giant snooze fest.”
The Municipal Market Data scale was not updated by press time, but munis were firming in morning trading. Yields on the five- to 22-years fell one basis point while yields beyond 23 years fell two basis points.
On Wednesday, the two-year muni yield closed flat at 0.36% for its sixth consecutive trading session. The 10-year yield fell two basis points to 1.94% and the 30-year yield fell four basis points to 3.64%.
Treasuries continued to weaken in Thursday early afternoon trading. The benchmark 10-year yield rose three basis points to 1.93% and the 30-year yield increased five basis points to 2.95%. The two-year yield held steady at 0.25%.
In the primary market, Wells Fargo priced for institutions $568.2 million of Puerto Rico Infrastructure Financing Authority revenue bonds. The bonds are rated Baa1 by Moody’s Investors Service and BBB by Standard & Poor’s. Pricing information was not available by press time.
Bank of America Merrill Lynch priced $145.6 million of North Carolina Garvee bonds. The credit is rated Aa2 by Moody’s, AA by Standard & Poor’s, and AA-minus by Fitch Ratings.
The bonds yielded 2.10% with 2% and 4% coupons in a split 2013 maturity. The bonds are callable at par in 2017.
In the secondary market, trades recorded by Municipal Securities Rulemaking Board showed firming across the curve, although more noticeably on the long end.
Bonds from an interdealer trade of New York Liberty Development Corp. 5s of 2041 yielded 4.28%, 11 basis points lower than where they traded Wednesday.
A dealer bought from a customer Golden State Tobacco Securitization Corp 5.75s of 2047 at 8.22%, three basis points lower than where they traded Wednesday.
A dealer bought from a customer Massachusetts School Building Authority 5s of 2041 at 4.02%, one basis point lower than where they traded Wednesday.
On the short end, bonds from an interdealer trade of Huntsville, Ala., 5s of 2025 yielded 2.89%, seven basis points lower than where they traded Wednesday.
