NEW YORK – The tax-exempt market was slightly stronger Monday, following Treasuries, as deals in the primary market stole attention.

“Other than the big primary deals, the market is quiet,” a New Jersey trader said. “It is flat to stronger. As long as we have the Fed kind of buying Treasuries, we’re not getting much movement here.”

Munis were slightly stronger early Monday afternoon, according to the Municipal Market Data scale. Yields inside five years were steady while the six- to nine-year yields fell one basis point. Outside 10 years, yields fell one and two basis points.

On Friday, the two-year yield closed steady at 0.33% for the fifth consecutive trading session. The 10-year yield and the 30-year yield each dropped three basis points to 1.97% and 3.32%.

Treasuries were stronger Monday. The benchmark 10-year yield fell three basis points to 1.96% while the 30-year yield dropped two basis points to 3.11%. The two-year was steady at 0.27%.

In the primary market, Wells Fargo priced for retail $556 million of New York Metropolitan Transportation Authority revenue bonds, rated A2 by Moody’s Investors Service and A by Standard & Poor’s and Fitch Ratings.

Yields ranged from 0.65% with a 3% coupon in 2013 to 4.36% with a 4.25% coupon in 2042. Bonds maturing in 2012 were offered via sealed bid. Credits maturing between 2024 and 2026, in 2028, 2029, 2032, 2041 and 2047 were not offered for retail. The bonds are callable at par in 2022.

The New Jersey trader said the retail pricing was right on the market. “Yields came out about plus 90 to the MMD scale in retail,” he said. “It’s right on the market and not attractive to us. Plus, the credit has been suspect as of late so it’s not getting a lot of follow through in the secondary.”

He added that the deal is coming with a lot of discount coupons – like 3% and 4%. “But, that doesn’t always bode well. People still seem to like the 5s,” he said. “But on retail, they get a gauge on what people are feeling, who is putting in for what, and if they don’t get a good response they might cheap it up in pockets.”

Bank of America Merrill Lynch priced for retail $491.8 million of Atlanta airport general revenue bonds, rated A1 by Moody’s and A-plus by Standard & Poor’s and Fitch. Institutional pricing is expected to come Tuesday.

Yields on the first series, $65.3 million on airport general revenue bonds not subject to the alternative minimum tax, ranged from 0.35% with a 2% coupon in 2013 to 4.05% with a 4% coupon in 2037. Bonds maturing in 2042 were not offered for retail. The bonds are callable at par in 2022.

Yields on the second series, $191.2 million of airport general revenue bonds not subject to the alternative minimum tax, ranged from 0.35% with a 3% coupon in 2013 to 2.72% with a 5% coupon in 2022. Credits maturing in 2016, 2018, 2020, and between 2023 and 2042 were not offered for retail. The bonds are callable at par in 2022.

Yields on the third series, $235.3 million of airport general revenue bonds subject to the alternative minimum tax, ranged from 0.60% with a 4% coupon in 2013 to 3.27% with a 5% coupon in 2022. Credits maturing between 2023 and 2042 were not offered for retail. The bonds are callable at par in 2022.

In the competitive market, Bank of America Merrill Lynch won the bid for $78.9 million of Albuquerque, N.M., general obligation bonds, rated Aa1 by Moody’s, AAA by Standard & Poor’s, and AA-plus by Fitch. Prices were not yet available.

Looking ahead to Tuesday, Pennsylvania is expected to auction the largest deal of the week – $950 million of GOs in the competitive market. The credit is rated Aa1 by Moody’s, AA by Standard & Poor’s, and AA-plus by Fitch. Traders said they expect many bidders as banks vie for top rankings in the underwriting leagues. Other traders said 10-year Pennsylvania GOs are trading 19 basis points above the MMD scale and expect the deal to come within a few basis points of that.

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