NEW YORK – The tax-exempt market sustained its rally Wednesday afternoon, continuing the trend from this morning when yields fell across the curve.
“It was on fire this morning,” said a trader in Chicago. “Before you got in it was moving and even at 7:30 A.M. it was picking up.” He added that by afternoon, the market is “still very firm and is up probably three to eight basis points in a lot of places.”
The Chicago trader added that munis are dependent on where the Treasury is and what is going on with Italy and Greece. “It’s been crazy here,” he said.
Tax-exempt yields on the Municipal Market Data scale were not updated by press time, but yields fell up to eight basis points in Wednesday morning trading.
On Tuesday, two-year munis closed at 0.42% for its sixth consecutive trading session. The 10-year muni yield finished at 2.29% and the 30-year muni yield closed at 3.73%.
The Treasury market continued to rally Wednesday early afternoon as well. Treasuries were steady from morning yields, but still down from yesterday. The two-year yield was trading down one basis point from Tuesday’s close at 0.24% and the 10-year yield was down 10 basis points to 1.98% - the first time in a week it fell below 2%. The 30-year yield saw the biggest rally, falling 12 basis points to 3.02%.
The stock market indexes were down between 2.26% and 2.64%. The Dow Jones Industrial Average was down 2.26%, or 275 points, to 11,495.
In the primary market Wednesday, the competitive calendar housed the largest deals of the day.
Wells Fargo won the bid for $400 million North Carolina capital improvement limited obligation bonds. The credits are rated Aa1 by Moody’s, and AA-plus by Standard & Poor’s and Fitch.
Yields ranged from 1.60% with a 5% coupon in 2017 to 4% with a 4% coupon in 2031. Credits maturing between 2013 and 2016, and 2032 were not reoffered. The bonds are callable at par in 2021.
Bank of America Merrill Lynch won the bid for $335.7 million city and county of San Francisco general obligation refunding bonds, rated Aa2 by Moody’s, AA by Standard & Poor’s, and AA-minus by Fitch.
Yields ranged from 0.28% with a 2% coupon in 2012 to 3.89% with a 4% coupon in 2029. Credits maturing from 2014 to 2020, and 2030 were sold but not available. The bonds are callable at par in 2021.
JPMorgan won the bid for $200 million and $100 million New York City Transitional Finance Authority future tax secured bonds. The bonds are rated Aa1 by Moody’s and AAA by Standard & Poor’s and Fitch. Details were not available by press time.
In the negotiated market, Citi priced for institutions $600 million New York City Transitional Finance Authority future tax secured bonds after two days of retail pricing. Details were not available by press time.
Bank of America Merrill Lynch priced $145 million of Providence Health and Services bonds through two conduit issuers. The bonds are rated Aa2 by Moody’s and AA by Standard & Poor’s and Fitch.
The Alaska Industrial Development and Export Authority offered $122.7 million revenue bonds, which yield 5.05% with a 5% coupon in 2040 and 4.83% with a 5.5% coupon in 2041. The bonds are callable at par in 2021.
Oregon Facilities Authority was the second conduit, selling $22.4 million revenue bonds, yielding from 1.24% with a 4% coupon in 2014 to 4.18% with a 4% coupon in 2026. The bonds are callable at par in 2021.
