NEW YORK – The tax-exempt market was gaining some ground Thursday afternoon as the tone in the market started to firm after a slow week.
“We are up two to three basis points right now, but there’s not a lot of action,” a New York trader said. “It’s a similar tone to yesterday afternoon and a little quiet. But definitely better buyers this afternoon.”
Indeed, munis were steady to firmer Thursday afternoon, according to the Municipal Market Data scale. Yields inside nine years were steady while outside 10 years, yields dropped as much as two basis points.
On Wednesday, the 10-year yield spiked up six basis point to 1.80% while the 30-year yield jumped four basis points to 3.11%. The two-year yield remained steady at 0.31% for the 21st consecutive trading session.
The Treasury yield curve flattened. The two-year yield rose one basis point to 0.30%. The benchmark 10-year yield fell two basis points to 1.74% while the 30-year yield plummeted six basis points to 2.84%.
In the primary market, Morgan Stanley priced $315.5 million of North Hudson Sewerage Authority, N.J., taxable and tax-exempt revenue bonds, rated A-minus by Standard & Poor’s and A by Fitch Ratings.
Yields on $164.9 million of tax-exempt gross revenue senior lien lease certificates ranged from 1.46% with a 4% coupon in 2016 to 4.25% with a 5% coupon in 2042. The bonds are callable at par in 2022. Yields were lowered as much as two basis points on the short end from preliminary pricing and as much as eight basis points on the long end.
Yields on $150.6 million of taxable gross revenue senior lien lease certificates ranged from 1.89% priced at par in 2017 to 5.396% priced at par in 2042. Yields ranged from 200 basis points to 255 basis points above the comparable Treasury yield.
Wells Fargo Securities priced $160.1 million of Chatham County, Ga., Hospital Authority revenue bonds, rated Aa2 by Moody’s Investors Service and AA by Standard & Poor’s. Pricing details were not available by press time.
In the secondary market, trades reported by the Municipal Securities Rulemaking Board showed weakening throughout the week.
A dealer sold to a customer New York State Environmental Facilities Corp. 5s of 2022 at 1.95%, seven basis points higher than where they traded Wednesday.
Bonds from an interdealer trade of Metropolitan Transportation Authority 4.25s of 2042 yielded 4.20%, four basis points higher than where they traded Wednesday.
Bonds from another interdealer trade of County of Wayne, Mich., 3s of 2014 yielded 2.75%, three basis points higher than where they traded Monday.
A dealer sold to a customer Michigan 3s of 2016 at 1.18%, one basis point higher than where they traded Monday.