NEW YORK – The tax-exempt market was fairly quiet Tuesday following a relatively slow day in the market Monday.
Although trading activity has been somewhat muted, deals priced in the primary market are seeing interest.
“It’s real quiet today,” a Texas trader said. “Retail is not tremendously involved in the secondary. It’s mostly flat.”
He added there was a little activity with kicker bonds. “It’s a good way to reach for yield without taking on extra risk.”
Munis were steady to firmer Tuesday morning, according to the Municipal Market Data scale. Yields inside four years were steady while the five- to seven-year yields fell one basis point. Outside eight years, yields were flat.
On Monday, the two-year yield closed steady at 0.31% for the fourth consecutive trading session. The 10-year yield and the 30-year yield each dropped three basis points to 1.85% and 3.25%.
Treasuries continued to weaken. The benchmark 10-year yield and the 30-year yield each rose three basis points to 1.96% and 3.11%. The two-year was steady at 0.27%.
In the primary market, JPMorgan priced for retail $464.2 million of Ohio hospital revenue bonds for the Cleveland Clinic Health System, rated Aa2 by Moody’s Investors Service and AA-minus by Standard & Poor’s. Institutional pricing is expected Wednesday. Pricing information was not available by press time.
Jefferies & Co. priced $269.7 million of Houston general obligation bonds, rated AA by Standard & Poor’s and Fitch Ratings.
Yields ranged from 1.06% with 4% and 5% coupons in a split 2017 maturity to 4.10% with a 4% coupon in 2042. The bonds are callable at par in 2022.
In the competitive market, New Jersey Economic Development Authority auctioned $434.6 million of revenue bonds in two pricings – a $412.8 million deal followed by a $21.8 million issue. The authority is rated A1 by Moody’s and A-plus by Standard & Poor’s and Fitch.
Bank of America Merrill Lynch won the bid for $412.8 million. Yields ranged from 2.21% with a 5% coupon in 2020 to 2.77% with a 5% coupon in 2023. Bonds maturing between 2015 and 2019 and between 2024 and 2027 were sold but not available. The credits are callable at par in 2022.
The $21.8 million deal is expected to be auctioned later this afternoon.
JPMorgan won the bid for $147.6 million of Raleigh, N.C., GOs, rated AAA by Standard & Poor’s. Pricing details were not yet available.
In the secondary market, trades reported by the Municipal Securities Rulemaking Board showed weakening over the past few trading session.
A dealer sold to a customer Milwaukee 4s of 2014 at 0.48%, 13 basis points higher than where they traded last Thursday.
A dealer sold to a customer Florida 2.25s of 2022 at 2.50%, eight basis points higher than where they traded Friday.
A dealer sold to a customer Washington State 4s of 2031 at 3.52%, two basis points higher than where they traded Monday.
A dealer sold to a customer New York 5.59s of 2035 at 4.22%, one basis point higher than where they traded Monday.
