NEW YORK – The tax-exempt market is firmer Wednesday as demand for bonds across the rating spectrum continues to outweigh supply.

“We have a very good tone in the market,” a Los Angeles trader said. “We are pricing some deals out here and getting really strong indications.” He added one of the deals he is bringing to market in California is oversubscribed due to retail demand.

He added there is no supply, so demand is hot. “The supply and demand factor is overwhelming everything else. With the Municipal Market Data scale stable the past few days, people believe in these rates more.”

He added that the front end is much more aggressive than the long end. “People are more picky locking in money for 30-years.”

“It’s a good time to be a seller,” he said, adding that he is pricing a BBB deal next week that he is already getting calls for, but sees double-A rated bonds “going out like crazy.” The sweet spot is a 10-year double-A rated bond. “If you have a 10-year double-A rated bond, come to market right now.”

Munis were firmer on the long end early Wednesday afternoon, according to the MMD scale. Yields inside 21 years were steady while yields outside 22 years fell as much as three basis points.

On Tuesday, the two-year yield held steady at 0.29%, the record low set last Tuesday. The 10-year yield also closed unchanged at 1.83%. The 30-year yield fell two basis points to 3.24%.

Treasuries were mixed Wednesday afternoon as the yield curve steepened. The two-year yield and the 10-year yield fell two basis points each to 0.28% and 1.91%. The 30-year yield rose one basis point to 3.08%.

In the primary market, the top two biggest deals of the week were priced Tuesday, a day earlier than expected, due to strong demand.

On Wednesday, JPMorgan priced for institutions $450.7 million of Tennessee general obligation bonds following a retail pricing Tuesday. The bonds are rated Aaa by Moody’s Investors Service, AA-plus by Standard & Poor’s, and AAA by Fitch Ratings.

Yields ranged from 0.54% with a 3% coupon in 2015 to 2.41% with a 5% coupon in 2027. The bonds are callable at par in 2022.

Bank of America Merrill Lynch priced for institutions $290 million of Virginia Commonwealth Transportation Board Garvees following retail pricing Tuesday. The credit is rated by Moody’s and AA by Standard & Poor’s. Pricing information was not available by press time.

Morgan Stanley priced $169.6 million of Arizona Water Infrastructure Finance Authority bonds, rated triple-A by all three rating agencies.

Yields ranged from 1.20% with a 4% coupon in 2018 to 2.38% with a 5% coupon in 2025. The bonds are callable at par in 2022.

In the secondary market, trades reported by the Municipal Securities Rulemaking Board showed firming all week.

A dealer sold to a customer Illinois 6.725s of 2035 at 5.80%, eight basis points lower than where they traded last Friday.

Bonds from an interdealer trade of Massachusetts State College Building Authority 5s of 2029 yielded 2.76%, five basis points lower than where they traded Monday.

Bonds from another interdealer trade of Port Authority of New York and New Jersey 5.647s of 2040 yielded 4.40%, five basis points lower than where they traded Tuesday.

Bonds from an interdealer trade of Lynwood, Wash., 4s of 2037 yielded 4.06%, one basis point lower than where they traded Tuesday.

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