The tax-exempt market found its footing Thursday afternoon as Treasuries rallied and muni yields were high enough to entice buyers.
"The market has been a disaster the last few days," an Ohio trader said. "Firmness in Treasuries today seems to have helped give munis a little bit of support. I think we finally saw the necessary yield and spread adjustments to get to where we found at least a few buyers."
Indeed, buyers liked the largest deal to hit the primary market this week as the $829.4 million Rutgers University bonds were three to nine times oversubscribed, traders said. Morgan Stanley priced and repriced the bonds in a taxable and tax-exempt series. The bonds are rated Aa3 by Moody's Investors Service and AA-minus by Standard & Poor's and Fitch Ratings.
Yields on the first series, $343.2 million of tax-exempt general obligation refunding bonds, ranged from 0.18% with a 1% coupon in 2014 to 4.35% with a 4.25% coupon and 4.10% with a 5% coupon in a split 2036 maturity. The bonds are callable at par in 2023. Yields were lowered as much as seven basis points from preliminary pricing. Yields on bonds maturing between 2029 and 2031 were raised as much as six basis points.
Yields on the second series, $352.4 million of tax-exempt GOs, ranged from 0.18% with a 1% coupon in 2014 to 4.20% with a 5% coupon in 2043. The bonds are callable at par in 2023. Yields were lowered as much as seven basis points from preliminary pricing.
The third series, $133.8 million of taxable GO refunding bonds, were priced at par to yield from 0.40% in 2014 to 4.712% in 2033. Spreads ranged from 60 basis points to 175 basis points above the comparable Treasury yield.
Wednesday, yields on the Municipal Market Data scale ended as much as six basis points higher. The triple-A two-year and 10-year yields rose one basis point each to 0.31% and 2.27%, respectively. The 30-year yield increased three basis points to 3.52%.
Muni yields on the Municipal Market Advisors 5% scale closed as much as four basis points higher. The 10-year yield climbed three basis points to 2.33% and the 30-year yield rose four basis points to 3.61%. The two-year ticked up one basis point to 0.39%.
Treasuries continued to gain Thursday afternoon. The benchmark 10-year yield slipped five basis points to 2.18% and the 30-year yield fell four basis points to 3.33%. The two-year was steady at 0.33%.