NEW YORK – The tax-exempt market continued to firm Monday afternoon, although activity slowed. There were not many primary deals to steal focus, and secondary trades started to fade.
“It’s kind of boring,” a trader in Atlanta said. “Long end is flat to slightly up,” he said, referring to prices. “It’s definitely lagging Treasuries.”
Munis were stronger Monday afternoon, according to the Municipal Market Data scale. Yields inside three years were steady while yields outside four years dropped two and three basis points.
On Friday, the 10-year yield finished at 1.75% – just eight basis points above its record low of 1.67% set Jan. 18. The 30-year yield closed at 3.08% – touching its record low as recorded by MMD last Wednesday. The two-year yield remained steady at 0.31% for the 18th consecutive trading session.
The Treasury yield curve flattened. The two-year yield rose two basis points to 0.28% while yields on the long end fell. The benchmark 10-year yield fell six basis points to 1.79% and the 30-year yield dropped seven basis points to 2.95%.
In the primary market, Morgan Stanley priced for retail $497.5 million of New York State Environmental Facilities Corp. state clean water and drinking water bonds for the New York City Municipal Water Finance Authority. The bonds are rated AAA by Standard & Poor’s. Pricing details were not yet available.
In competitive deals, Georgia’s Metropolitan Atlanta Rapid Transit Authority auctioned $331.5 million of bonds in two pricings. The credit is rated Aa3 by Moody’s Investors Service and AA-plus by Standard & Poor’s.
JPMorgan won the bid for $311.1 million. Yields ranged from 1.99% with a 5% coupon in 2021 to 4.00% with a 4% coupon in 2040. The bonds are callable at par in 2022.
Guggenheim Partners won the bid for $20.4 million. Prices were not yet available.
In the secondary market, trades reported by the Municipal Securities Rulemaking Board showed a mix of stronger and weaker trades.
A dealer sold to a customer Puerto Rico Sales Tax Financing Corp. zeroes of 2054 at 6.03%, eight basis points higher than where they traded Friday. An interdealer trade of Massachusetts Health and Educational Facilities Authority 5.375s of 2017 yielded 0.75%, one basis point higher than where they traded Thursday.
Other trades show munis were stronger. A dealer sold to a customer Chicago second-lien water revenue 5s of 2042 at 3.61%, four basis points lower than where they traded Friday. A dealer bought from a customer Baltimore convention center 5s of 2032 at 5.04%, eight basis points lower than where they traded Friday.