NEW YORK – The tax-exempt market continues to weaken Wednesday as demand fails to match supply.

“The market is generally weaker,” a New York trader said. “We are seeing cuts today across the board with continued supply coming to market. But I think that was expected.”

He added the Maryland general obligation deal is getting done, but at a price. “There are concessions definitely to where the Municipal Market Data has been and historical spreads for Maryland.”

Munis continued to weaken early Wednesday afternoon, according to MMD. Yields inside two years were steady while the three- to 11-year yields jumped between three and five basis points. The 12- to 15-year yields spiked between two and four basis points while yields outside 16-year rose up to three basis points.

On Tuesday, the two-year yield ended flat at 0.26%, its record low first recorded by MMD on Feb. 16. The 10-year yield jumped four basis points to 1.98% while the 30-year yield rose one basis point to 3.29%.

Treasuries were weaker Wednesday. The two-year yield and the benchmark 10-year yield jumped two basis points each to 0.31% and 1.97%. The 30-year yield increased three basis points to 3.11%.

In the primary market, Siebert Brandford Shank & Co. is expected to price $252 million of Detroit Public Schools refunding bonds. The school system itself is junk-rated, but Moody’s Investors Service rated it Aa2 based on its participation in the Michigan School Bond Qualification and Loan Program.

Citi priced $300 million of San Diego Community College District general obligation refunding bonds, rated Aa1 by Moody’s and AA-plus by Standard & Poor’s. The deal was expected to come Thursday. Prices were not yet available.

In the competitive market, Maryland auctioned $680.2 million of GOs in two offerings, rated triple-A. The competitive pricing comes after a $150 million negotiated deal that was priced earlier in the week by Bank of America Merrill Lynch.

Bank of America Merrill Lynch won the bid for $543.9 million of state and local facilities loan GO bonds. Yields ranged from 0.47% with a 5% coupon in 2015 to 3.05% with a 3% coupon in 2027. Credits maturing between 2019 and 2022, and in 2024 and 2025 were sold but not available. The bonds are callable at par in 2022.

Bank of America Merrill Lynch also won the bid for $136.3 million of state and local facilities GO refunding bonds. The bonds yielded 0.58% with a 4% coupon in 2016, 1.09% with a 4% coupon in 2018, and 1.93% with a 4% coupon in 2021. Credits maturing in 2022 were sold but not available.

The New York Metropolitan Transportation Authority issued $400 million of floating rate tender notes four pricings, rated A2 by Moody’s and A by Standard & Poor’s and Fitch Ratings.

Bank of America Merrill Lynch won the bid for $250 million of fixed rated revenue bonds. Yields ranged from 2.13% with a 5% coupon in 2019 to 3.88% with a 4% coupon in 2032. Credits maturing between 2012 and 2018, in 2025, in 2028, and between 2033 and 2039 were sold but not available. The bonds are callable at par in 2022.

Bank of America Merrill Lynch also won the bid for one of the $50 million deals. The bonds were priced 14 basis points above the SIFMA index and mature in 2040. The bonds are callable at par in Nov. 2012.

JPMorgan won the bid for $50 million. Pricing details were not available.

The winning bid for the remaining $50 million has yet to be announced.

In the secondary market, trades reported by the Municipal Securities Rulemaking Board showed weakening.

A dealer sold to a customer New York City Municipal Water Finance Authority 5s of 2045 at 3.85%, five basis points higher than where they traded Tuesday.

Bonds from an interdealer trade of Texas 5s of 2029 yielded 2.01%, four basis points higher than where they traded Tuesday.

A dealer bought from a customer California Health Facilities Financing Authority 5s of 2051 at 4.34%, four basis points higher than where they traded last Friday.

Another dealer bought from a customer Illinois 5.1s of 2033 at 5.45%, two basis points higher than where they traded on Friday.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.