NEW YORK – After weakening Monday morning, the tax-exempt market was firming in early afternoon trading.
“The week is gearing up with a number of Texas bank qualified deals,” said a trader in Dallas. “The market is plugging along and it looks as if there are deals heading into December.”
The secondary market showed gains in munis and traders concurred. The Dallas trader added, “I was doing trades today that didn’t feel like there was pressure on the bonds.”
A trader in New York said the market has “picked up a little” but added it’s still a “very slow Monday with volume down about 15% here compared to last Monday.”
However, the Municipal Market Data scale still showed weakening in munis. Yields on munis maturing in 2019 and 2020 rose up to one basis point while yields on the 10-year rose up to two basis points. On the long end, muni yields rose up to five basis points.
On Thursday, the two-year muni yield closed at 0.42% for its eighth consecutive trading session. The 10-year muni yield finished at 2.25%, and the 30-year muni yield closed at 3.73%.
In early afternoon trading on Monday, Treasuries were firming, paring all of Thursday’s losses. The benchmark 10-year Treasury yield fell four basis points from where it opened this morning, to 2.04%. It is down two basis points from Thursday’s close. The 30-year is down six basis points from morning’s opening, to 3.08%. It is down three basis points from Thursday’s close. The two-year is steady at 0.24%.
Barclays Capital priced for retail $450 million New York City Municipal Water Finance Authority water and sewer revenue bonds. The bonds are rated Aa2 by Moody’s Investors Service and AA-plus by Standard & Poor’s and Fitch Ratings. Institutional pricing is expected Tuesday.
A 2039 split maturity yielded 4.2% with coupons of 4.125% and 5%. Debt maturing in 2044 was not offered for retail. The bonds are callable at par in 2021.
Barclays also priced $146.8 million Ohio general obligation refunding bonds in three series. The bonds are rated Aa1 by Moody’s and AA-plus by Standard & Poor’s and Fitch.
Yields on the first series, $100 million common schools general obligation refunding bonds, ranged from 1.67% with 5% and 4% coupons in a 2017 split maturity to 2.24% with 5% and 4% coupons in a 2019 split maturity. Credits maturing between 2020 and 2022 were not offered for retail.
Yields on the second series, $27.9 million higher education general obligation refunding bonds, ranged from 2.49% with a 4% coupon in 2020 to 2.8% with a 5% coupon in 2022.
Yields on the third series, $18.8 million infrastructure improvement general obligation refunding bonds, ranged from 1.67% with a 3.5% coupon in 2017 to 2.8% with a 4% coupon in 2022.
