California led the primary market Tuesday afternoon with $2.16 billion of tax-exempt bonds pricing for retail and indications of interest on almost $600 million of taxable debt.

"We are putting in orders for retail and getting good response," a Los Angeles trader said. "And so far, so good. Yields have gone up recently so the deal looks more attractive to retail. But there are a lot of bonds to sell."

JPMorgan priced the first of two retail order periods for $2.16 billion of California various purpose general obligation bonds, rated A1 by Moody's Investors Service, A by Standard & Poor's, and A-minus by Fitch Ratings. A second retail order period is expected Wednesday followed by institutional pricing Thursday.

Yields on the first series, $1.06 billion of various purpose GOs, ranged from 0.87% with a 2% coupon in 2017 to 4% priced at par in 2043. Bonds maturing in 2014 were offered via sealed bid. Portions of bonds maturing between 2017 and 2043 were not offered for retail. The bonds are callable at par in 2023.

Yields on the second series, $1.1 billion of various purpose GO refunding bonds, ranged from 0.87% with a 5% coupon in 2017 to 3.68% with a 4% coupon and 3.38% with a 5% coupon in a split 2033 maturity. Bonds maturing between 2014 and 2016 were offered via sealed bid. Bonds maturing between 2027 and 2032 were not offered for retail. The bonds are callable at par in 2023.

Goldman, Sachs & Co. took indications of interest on $364.2 million of California federally taxable GOs. The bonds had a 0.25% coupon in 2015 and 0.375% coupon in 2016. Spreads were 50 and 65 basis points above the comparable Treasury yield.

Goldman also took indications of interest on a remarketing of $228 million of taxable California Build America Bonds. The bond had a 2.75% coupon in 2039 with 175 basis point spread above the comparable Treasury.

Outside the California deal, the municipal market seemed to catch a break from stronger Treasuries and a weaker stock market.

"The California Department of Water Resources deal got a good bid and that's stronger," the Los Angeles trader said. "Stuff is pricing well. With Treasuries up it's a nice day to price. It was worse yesterday so today is catch up. Trades are mostly flat."

Ramirez & Co. priced and repriced $537.6 million of the New York City Municipal Water Finance Authority water and sewer system second general resolution revenue bonds, rated Aa2 by Moody's and AA-plus by Standard & Poor's and Fitch.

In repricing, yields ranged from 3.257% with a 3.125% coupon in 2027 to 3.47% with a 5% coupon in 2038. The bonds are callable at par in 2023. Yields were lowered one basis point on the 2035 maturity and three basis points on the 2038 maturity from retail pricing.

In the competitive market, Bank of America Merrill Lynch won the bid for $312.8 million of triple-A rated North Carolina refunding GOs. Yields ranged from 0.15% with a 2% coupon in 2013 to 1.58% with a 5% coupon in 2021. Yields on the 2014 maturity were two basis points lower than the respective Municipal Market Data yield. Yields on the 2015 to 2019 maturities were three to eight basis points higher than their respective MMD yields.

On Monday, municipal bond market scales ended weaker after posting losses for five consecutive trading sessions last week.

Yields on the Municipal Market Data triple-A GO scale ended as much as two basis points higher. The 10-year yield and 30-year yield closed flat at 1.99% and 3.08%, respectively, for the second consecutive session. The two-year closed at 0.31% for the 15th straight session.

Since the beginning of March, the 10-year MMD yield has jumped 16 basis points from 1.78% on March 1. The 30-year yield has soared 18 basis points from 2.90% at the beginning of the month.

On Monday, yields on the Municipal Market Advisors 5% coupon triple-A benchmark scale closed as much as two basis points higher. The 10-year yield and the 30-year yield rose one basis point each to 2.00% and 3.16%, respectively. The two-year was steady at 0.33% for the 10th session.

Since the beginning of March, the 10-year yield spiked 18 basis points from where it started the month at 1.82%. The 30-year yield also jumped 18 basis points from 2.98% on March 1.

Treasuries were stronger on the long end Tuesday. The benchmark 10-year yield dropped four basis points to 2.02% while the 30-year yield fell three basis points to 3.22%. The two-year yield rose one basis point to 0.27%.

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