The week's largest deals have arrived to give the municipal market a year-end feel.
As expected, investors are feeding at the new-issue trough and largely ignoring the secondary, traders say. The deals are arriving with lowered yields in repricing.
For the week, the market appears healthy, a trader in New York said. "We're morphing into year end with it being a real new-issue focus market," he said. "Rates in general are fine ... The technicals in our market are probably OK. There's an awful lot of money around. The game plan for customers is watch the new-issue market materialize from year end and participate from that front."
The muni market this week expects the calendar to weigh in at $8.36 billion. A revised $6.75 billion reached the market last week, according to Thomson Reuters.
Barclays leads the way with two New Jersey Transportation Trust Fund Authority deals that total more than $1.2 billion, with the biggest, $920.7 million of authority 2012 Series AA program bonds. Both deals were rated A1 by Moody's Investors Service and A-plus by Standard & Poor's and Fitch Ratings.
Yields ranged from 0.37% with a 4.00% coupon in 2014 to 3.07% with a 5.00% coupon and 3.34% with a 3.25% coupon in a split maturity in 2038. Yields fell as much as three basis points in repricing.
Retail investors had priority on bids that mature in 2014, 2016, 2017, 2020 and 2022.
The bonds are callable at par in 2022
Barclays priced for the authority $326.3 million of Series A transportation system bonds. The deal was structured as a term bond scheduled to mature in 2042, at a yield of 3.13% with a 5.00% coupon.
Institutional investors got their shot at $819.8 million of Texas Transportation Commission state highway improvement general obligation bonds. Wells Fargo Securities held a retail order period for the deal Monday.
The bonds are rated Aaa by Moody's, AA-plus by Standard & Poor's and AAA by Fitch Ratings.
Yields ranged from 0.91% with a 5.00% coupon in 2019 to 2.62% with a 5.00% coupon in 2042. The deal arrived with higher yields than those set for the retail order period, but with yields up to five basis points lower in repricing. The bonds are callable at par in 2022.
The commission also auctioned $99.7 million of Texas Transportation Commission general obligation bonds. Yields ranged from 0.30% at par in 2014 to 1.25% at par in 2019.
Raymond James | Morgan Keegan priced $442.4 million New York City Municipal Water Finance Authority water and sewer second general resolution revenue bonds. The bonds are rated Aa2 by Moody's and AA-plus by Standard & Poor's and Fitch.
The deal was priced to yield 2.91% with a 5.00% coupon and 3.13% with a 4.00% coupon in multiple maturities in 2047.
The secondary has taken a noticeable back seat on the day, the New York trader said. "When you get to large, bellwether deals, it takes a lot of the focus off the secondary because there's better structure and better size to buy new issue," he said. "That's where everyone gravitates."
Tax-exempt yields were steady midway through Tuesday's session, according to a market read.
Muni yields closed out Monday higher beyond the front end of the curve, after rallying for almost a week. The 10-year yield inched up to 1.48%, one basis point above the record low it set Wednesday and held for two more days, according to the Municipal Market Data scale read.
The 30-year yield also ended one basis point higher at 2.48%, dangling above its record low. The two-year held at 0.30% for the 46th straight trading session.
Treasury yields fell across the curve as the day's session crossed into the afternoon. The benchmark 10-year yield slipped two basis points to 1.61%.
The two-year yield ticked down one basis point to 0.26%. The 30-year yield fell two basis points to 2.78%.