NEW YORK – The tax-exempt market started out busy Wednesday as the primary calendar had its fullest day of the week and trading was lively.
“It’s a bit busy,” said a trader in New York, adding that yields were mostly flat. “We still have people getting a little aggressive trying to lighten up going into year end, but the bid side is holding it up here.”
Munis were flat across the curve, according to the Municipal Market Data scale.
On Tuesday, the two-year muni yield closed flat at 0.36% for its fifth consecutive trading session. The 10- and 30-year muni yield closed down one basis point each to 1.96% and 3.68%, respectively.
Treasuries were firming on the long-end. The benchmark 10-year fell two basis points to 1.95% and the 30-year fell four basis points to 2.97%. The two-year yield rose one basis point to 0.25%.
In the primary market, Wells Fargo is expected to open the first day of retail pricing on $568.2 million of Puerto Rico Infrastructure Financing Authority revenue bonds, the largest negotiated pricing of the week. The bonds are rated Baa1 by Moody’s Investors Service and BBB by Standard & Poor’s. A second day of retail and institutional pricing are expected Thursday.
Siebert Brandford Shank & Co. is expected to sell $493.4 million of Detroit water supply system revenue bonds in two series. The credit is rated A1 by Moody’s and A-plus by Standard & Poor’s.
Wednesday morning, Well Fargo priced for institutions $223.4 million of District of Columbia income tax secured revenue bonds.
The deal was originally scheduled to be a competitive transaction but was switched to negotiated after 100% of Tuesday’s $200 million of D.C. income tax secured bonds sold to retail investors.
The credit is rated Aa1 by Moody’s Investors Service, AAA by Standard & Poor’s, and AA-plus by Fitch.
Yields ranged from 3.09% with a 5% coupon in 2026 to 3.91% with a 5% coupon in 2036. The bonds are callable at par in 2021. Yields on the retail pricing Tuesday ranged from 0.30% with a 2% coupon in 2012 to 4% priced at par and 3.98% with a 5% coupon in a 2036 split maturity.
Morgan Keegan is expected to issue $156.1 million of Virginia Housing Development Authority rental housing taxable bonds. The credit is rated Aa1 by Moody’s and AA-plus by Standard & Poor’s.
