The tax-exempt market continued to show gains Tuesday afternoon as deals were priced to go and secondary trading was firmer.

“It still seems pretty strong,” a New York trader said. “I was hoping it was weaker to try to loosen this market up because we’ve been strong for a while.”

This trader added he was surprised by how strong the market was trading, but said it is being driven by cash on the sidelines. “It felt really weak at the end of last week and Monday was nonexistent with the Jewish holiday. But today is back to the ordinary business.”

In the primary market, the trader said there aren’t balances on the books. “They are pricing to move the deals, but it is ripe. One deal was 15 times oversubscribed.”

The pricing of new deals kicked off Tuesday. Bank of America Merrill Lynch priced for retail $716 million of California's Bay Area Toll Authority revenue bonds, rated Aa3 by Moody's Investors Service, AA by Standard & Poor's and AA-minus by Fitch Ratings. An additional retail order period is expected Wednesday followed by institutional pricing Thursday. Pricing details were not available by press time.

Siebert Brandford Shank & Co. priced for retail $570 million of Connecticut general obligation and GO refunding bonds in three series, rated Aa3 by Moody's and AA by Standard & Poor's, Fitch Ratings and Kroll Bond Rating Agency. A second retail order period is expected Wednesday followed by institutional pricing Thursday.

The first series, $175 million of GO SIFMA index bonds, were not offered to retail.

Yields on the second series, $325 million of GOs, ranged from 1.79% with 2%, 3%, and 4% coupons in a split 2020 maturity to 3.15% with 3.125% and 4% coupons in a split 2032 maturity. Portions of bonds maturing between 2024 and 2032 were not offered for retail. The bonds are callable at par in 2022.

Bonds in the third series, $70 million of GO refunding bonds, yielded 0.36% with 3% and 4% coupons in 2014 and 0.48% with a 4% coupon I n2015. Bonds maturing in 2013 were offered via sealed bid.

In the competitive market, Nevada’s Clark County School District issued $174.4 million of general obligation limited-tax refunding bonds, rated Aa3 by Moody's, AA-minus by Standard & Poor’s, and A-plus by Fitch.

JPMorgan won the bid for $165.9 million of GO limited tax refunding bonds. The bonds had 5% coupon I n2015 to 5% coupons in 2021. Prices were not available by press time.

Bank of America Merrill Lynch won the bid for $8.5 million of GO limited tax refunding bonds additionally secured by pledged revenues. The bonds yielded 0.47% with a 4% coupon in 2014.

On Monday, the 10-year Municipal Market Data yield closed steady at 1.93% while the 30-year yield finished flat at 3.06%. The two-year closed at 0.29% for the 37th consecutive session.

The 10-year MMD yield is now the highest since April 17, when it yielded 1.95%. The 30-year yield is the highest since July 10 when it touched 3.06%.

Treasuries traded stronger Tuesday afternoon. The benchmark 10-year yield dropped four basis points to 1.80% while the 30-year yield fell two basis points to 3.01%. The two-year yield fell one basis point to 0.26%.

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