The Metropolitan Transportation Authority lowered yields on its $500 million transportation revenue bonds during institutional sale Thursday.
The market strengthened Wednesday after the summary economic projections of the Federal Open Market Committee showed rates rising quicker, if not sooner, than expected, according to a trader in New York.
"The pricing probably has a lot to do with current market conditions, and yields on the MMD were falling," the trader said.
Yields had fallen as much as two basis points on Wednesday, according to Municipal Market Advisors' data.
The market continued to strengthen on Thursday with yields dropping as much as two basis points for bonds maturing in five-to six-years, and from one to three basis points for bonds maturing in seven to 30 years, according to Municipal Market Data's triple-A scale.
The MTA bonds' yields were lowered from three to six basis points, with bonds maturing in 12 to 15 years experiencing the sharpest decline.
Yields now range from 0.45% with a 4% coupon in 2016 to 3.93% with a 5% coupon in 2044.
Traders said the bonds did not receive heavy demand during their retail order period on Wednesday, because the spread on the bonds came tight.
"The deal was not received well by retail," a trader in Chicago said. "They probably tightened the spreads because the bonds were upgraded, but they came too tight."
Standard & Poor's had raised its rating for the New York MTA to AA-minus from A-plus before the bonds were priced.
"I've heard [the bonds did not get a lot of demand from retails] too, they came priced to richly, and the market was selling off earlier in the week bonds were sold," a trader in Pennsylvania said.
The market had been selling-off on Tuesday, the day before Jefferies priced the bonds. On Tuesday, yields had risen up to two basis points across the curve, according to Municipal Market Advisors' data.
The bonds earned an A2 from Moody's Investors Service and A from Fitch Ratings. They have an optional call at par in 2024, and two sinking funds with term bonds in 2039 and 2044.
Jefferies didn't respond to questions about demand on the issue.
The largest negotiated deal of the week the $944 million general obligation mobility fund refunding bonds from Texas Transportation Commission were priced on Thursday by Bank of America Merrill Lynch. Yields ranged from 0.76% with a 4% coupon in 2017 to 3.26% with a 5% coupon in 2034.
The bonds can be called at par in 2024, and earned triple-A ratings from the three major rating agencies.
Treasures weakened Thursday morning, with the 30-year yield climbing three basis points to 3.44% and the 10-year benchmark inching up one basis point to 2.61%. The two-year note was unchanged at 0.46% from Wednesday's market close.
