The tax-exempt market continued with a firmer tone Tuesday morning as traders said the market saw firm bids in a week with overall light supply.
"It's still well-bid generally," a New York trader said. "Credits spreads are generally tight. People want to be involved in the market." He said the market felt one to two basis points firmer in the morning trading session, though "decent size competitive deals may set the tone and that could change pretty quickly."
One triple-A rated deal that could set direction for the market is $121.6 million of Denver general obligation bonds expected to be auctioned later Tuesday.
New York City is also expected price bonds for retail investors for a second day. This New York trader said the deal was priced cheaper to where the bonds were trading in the secondary.
Siebert Brandford Shank & Co. is expected to hold a second retail order period for $500 million of New York City GOs, rated Aa2 by Moody's Investors Service and AA by Standard & Poor's and Fitch Ratings. Institutional pricing is expected Wednesday. The city on Wednesday will also issue a separate taxable competitive deal totaling $125 million.
In the first retail order period Monday, yields on the first series of $300 million ranged from 0.80% with a 3% coupon in 2016 to 4.26% with a 5% coupon in 2033 and are callable at par in 2023. Bonds maturing in 2015 were offered via sealed bid. Portions of bonds maturing between 2026 and 2031 were not offered for retail. Bonds with 5% coupons maturing between 2022 and 2033 yielded 19 basis points to 22 basis points above Friday's double-A Municipal Market Data scale.
Yields on the second series of $179 million ranged from 0.80% with a 4% and 5% coupon in a split 2016 maturity to 2.26% with a 4% and 5% coupon in a split 2020 maturity. Bonds with 5% coupons yielded six basis points to 16 basis points above Friday's double-A MMD scale.
Yields on the third series of $20.2 million ranged from 0.60% with a 5% coupon in 2016 to 2.11% with a 5% coupon in 2020. In a sign of demand, most bonds on this series were priced richer than Friday's double-A MMD scale, yielding between four and 14 basis points through the scale on bonds maturing between 2016 and 2019. Bonds maturing in 2020 yielded one basis point above the scale.
On Monday, yields on the triple-A Municipal Market Data scale ended as much as three basis points lower. The 10-year yield fell one basis point to 2.59% and the 30-year yield dropped three basis points to 4.17%. The two-year was steady at 0.36% for the second session.
Treasuries were stronger for the third consecutive session. The benchmark 10-year and 30-year yields fell two basis points each to 2.69% and 3.71%, respectively. The two-year was steady at 0.34%.