NEW YORK – The tax-exempt market was stronger Tuesday morning, following Treasuries, as traders scramble to take advantage of market liquidity before it shuts down for a holiday-shortened week.
After the second largest deal of the week was received very well Monday, many deals are expected be priced a day ahead of schedule to take advantage of the firmer tone.
“Munis are a little busy,” a New York trader said. “They are up with Treasuries. It seems people want to put on positions now.”
He added because of the holiday-shortened week, “liquidity is going to dry up this afternoon into tomorrow. So traders take advantage when they can.”
The Municipal Market Data scale was not updated by press time. On Monday, the two-year yield finished steady at 0.36% for its 11th consecutive trading session while the 30-year yield closed flat at 3.39%. The 10-year yield jumped two basis points to 2.13%.
Treasuries were stronger Tuesday morning after a slew of disappointing economic data. The benchmark 10-year yield and the 30-year yield each fell three basis points to 2.18% and 3.32%. The two-year yield was steady at 0.33%.
In the primary market, the largest deal of the week is expected to price for institutions a day ahead of schedule. Citi is expected to price $1.7 billion of California Statewide Communities Development Authority revenue bonds for Kaiser Permanente. The bonds are rated A-plus by Standard & Poor’s and Fitch Ratings.
Barclays is expected to price $575 million of South Carolina Public Service Authority Santee Cooper revenue obligation bonds, rated Aa3 by Moody’s Investors Service and AA-minus by Standard & Poor’s and Fitch.
JPMorgan is expected to price $219.6 million of Arizona Board of Regents revenue and refunding bonds for Arizona State University, rated Aa3 by Moody’s and AA by Standard & Poor’s.
In the competitive market, Hartford County Metropolitan District is expected to auction $152.1 million of bonds.
