The tax-exempt market traded steady to slightly stronger Wednesday, moving in tandem with Treasuries.
Traders said the market appeared confused on how to react to both limited supply and an upcoming debt ceiling debate, and whether it was positive or negative for bond prices. Instead, munis traded mostly flat amid the uncertainty. Traders said once a resolution is clear in any direction, the market should regain confidence.
"It's one of those things where stocks rallied yesterday in the face of the shutdown but now they're down because of it," a Chicago trader said. "Yesterday we completely shrugged it off. I think we'll just stick around trading even until something shakes out."
This trader said muni yields were mostly flat to a slightly stronger bias, following Treasuries.
In the primary market, JPMorgan held preliminary pricing for $898.5 million of Chicago O'Hare International Airport bonds, rated A2 by Moody's Investors Service and A-minus by Standard & Poor's and Fitch Ratings.
Yields on the first series, $334.7 million of general airport senior lien revenue refunding bonds subject to the alternative minimum tax, ranged from 1.05% with a 5% coupon in 2016 to 4.43% with a 5% coupon in 2026. Bonds maturing in 2014 and 2015 were offered via sealed bid. The bonds are callable at par in 2023.
Yields on the second series, $168.1 million of non-AMT bonds, ranged from 0.85% with a 4% coupon in 2016 to 4.56% with a 5.25% coupon in 2029. Bonds maturing in 2014 and 2015 were offered via sealed bid. The bonds are callable at par in 2023.
Yields on the third series, $99.5 million of general airport senior lien revenue bonds subject to the AMT, ranged from 1.54% with a 4% coupon in 2017 to 5.57% with a 5.5% coupon in 2044. The bonds are callable at par in 2023.
Yields on the fourth series, $296.2 million of non-AMT bonds, ranged from 1.29% with a 5% coupon in 2017 to 5.22% with a 5% coupon in 2044. The bonds are callable at par in 2023.
Ramirez & Co. priced for retail $575 million of Connecticut general obligation bonds, rated Aa3 by Moody's Investors Service and AA by Standard & Poor's, Fitch Ratings and Kroll Bond Ratings. Institutional pricing is expected Thursday.
Yields ranged from 0.73% with 3% and 4% coupons in a split 2016 maturity to 3.52% with a 5% coupon in 2027. Bonds maturing in 2015 were offered via sealed bid. The bonds are callable at par in 2023.
Siebert Brandford Shank & Co. priced for institutions $459.8 million of California State Public Works Board lease revenue bonds, following a retail order period Tuesday. The deal includes two series for correctional facilities projects rated A2 by Moody's and A-minus by Standard & Poor's and Fitch, as well as one series for various projects at the California State University rated Aa3 by Moody's and A-minus by Standard & Poor's and Fitch.
Yields on the first series of $136.3 million ranged from 0.50% with a 1% coupon in 2015 to 4.70% with a 4.625% coupon in 2033. Bonds maturing in 2014 were offered via sealed bid. The bonds are callable at par in 2023.
Yields on the second series of $161.1 million ranged from 0.50% with a 5% coupon in 2015 to 4.55% with a 5.25% coupon in 2033. Bonds maturing in 2014 were offered via sealed bid and all are callable at par in 2023.
Yields on the third series of $162.4 million ranged from 0.76% with a 5% coupon in 2016 to 4.83% with a 5% coupon in 2038. The bonds are callable at par in 2023.
On Tuesday, yields on the triple-A Municipal Market Data scale ended as much as two basis points higher. The two-year yield rose one basis point to 0.37% and the 10-year yield increased two basis points to 2.56%. The 30-year was steady at 4.12%.
Yields on the Municipal Market Advisors scale also ended steady to one basis point higher. The 10-year and 30-year yields increased one basis point each to 2.71% and 4.27%, respectively. The two-year was steady at 0.54% for the ninth consecutive trading session.
Treasuries continued to strengthen on worse-than-expected economic data released Wednesday morning and concerns over the government shutdown and looming debt ceiling debate. The benchmark 10-year yield slid three basis points to 2.62% and the 30-year yield fell two basis points to 3.70%. The two-year yield fell one basis point to 0.33%.
