NEW YORK – The tax-exempt market was steady Tuesday as interest in new deals failed to push munis higher.

“Overall, Treasuries are off and the muni market feels like it wants to feel better, but it’s not showing up yet,” a Chicago trader said. “There was a focus on new deals but we have a light week on the calendar relative to last week. And it’s still not constructive in terms of putting money to work in this marketplace.”

He added that while the 10-year yield rose 14 basis points and the 20-year rose 10 basis points last week, market participants don’t believe munis are going to be stronger this week. “I don’t think participants believe that we’re going to reverse course,” he said. “The trend is higher rates – just in what time frame?”

The Municipal Market Data scale was not updated by press time. But Tuesday morning, yields were mostly steady to one basis point weaker on the long end.

On Monday, the two-year yield closed steady at 0.27% for its third consecutive trading session, remaining one basis point above its record low. The 10-year yield dropped three basis points to 2.02% while the 30-year yield fell two basis points to 3.29%.

Treasuries were weaker on positive economic news. The benchmark 10-year yield and the 30-year yield jumped four basis points each to 2.08% and 3.21%. The two-year yield rose one basis point to 0.34%.

In the primary Tuesday, Bank of America Merrill Lynch priced for retail $750 million of New York State Thruway Authority bonds, rated AA by Standard & Poor’s and Fitch Ratings. Details were not yet available.

Ramirez & Co. priced $500 million of Illinois general obligation bonds, rated A2 by Moody’s Investors Service, A-plus by Standard & Poor’s, and A by Fitch.

Yields ranged from 0.83% with a 5% coupon in 2013 to 4.69% with a 5% coupon in 2037. The bonds are callable at par in 2022.

Bank of America Merrill Lynch priced for retail $206 million of Dormitory Authority of the State of New York bonds for New York University, rated Aa3 by Moody’s and AA-minus by Standard & Poor’s. Pricing information was not yet available.

Bank of America Merrill Lynch also priced $148.3 million of School Board of Lee County, Fla., certificates of participation after a retail order period Monday. The credit is rated Aa3 by Moody’s, A-plus by Standard & Poor’s, and AA-minus by Fitch.

Yields ranged from 0.93% with a 4% coupon in 2014 to 3.85% with a 3.75% coupon in 2027. The bonds are callable at par in 2022.

Bank of America Merrill Lynch priced $177 million of Industrial Development Authority of the County of Apache, Ariz., pollution control revenue bonds for the Tucson Electric Power Company project. The credit is rated Baa3 by Moody’s and BBB-minus by Standard & Poor’s and Fitch.

The bonds were priced a par to yield 4.50% in 2030 and are callable at par in 2022.

In economic news, the Federal Open Market Committee is expected to announce its rate policy decision at 2:15 p.m., Eastern time.

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