NEW YORK – The primary market continued to provide direction for the broader tax-exempt market Wednesday as well-received deals in the new issue market pushed muni yields lower.
“It’s slightly firmer today,” a New Jersey trader said. “The scale is expected to be pretty unchanged for the day. Treasuries are up a little so we’re not seeing anything necessarily pick up in the market, but it’s fairly stable.”
In terms of new deals, the trader said the New Jersey Garden State Preservation Trust deal is going well. “It’s hard to say this early on but it appears to be going well,” he said. “We are seeing business. It will wrap up this afternoon but my suspicion is it’s going OK.”
Munis were stronger early Wednesday afternoon, according to the Municipal Market Data scale. The two- and three-year yields fell two basis points while the four- to six-year yields fell one basis point. Outside seven years, yields fell up to three basis points.
On Tuesday, the two-year yield closed steady at 0.33% for the seventh consecutive trading session. The 10-year yield was flat at 1.95% while the 30-year yield was steady at 3.31%.
Treasuries continued to climb. The two-year yield fell one basis point to 0.27% while the 30-year yield dropped two basis points to 3.13%. The benchmark 10-year yield fell three basis points to 1.98%.
In the primary market, Morgan Stanley held preliminary pricing for $347.4 million of Ascension Health Alliance senior credit group revenue bonds, rated Aa1 by Moody’s Investors Service, and AA-plus by Standard & Poor’s and Fitch Ratings.
Yields on the first series, $129.1 million of Illinois Finance Authority revenue bonds, ranged from 2.11% with a 5% coupon in 2019 to 4.11% with a 5% coupon in 2042. The bonds are callable at par in 2021.
Bonds in the second series, $86 million of Maryland Health and Higher Educational Facilities Authority revenue bonds, yielded 4.11% with a 5% coupon in 2051. The bonds are callable at par in 2021.
Bonds in the third series, $44.2 million of Health and Educational Facilities Board of Rutherford County, Tenn., yielded 4.16%, with a 5% coupon in 2047. The bonds are callable at par in 2021.
Bonds in the fourth series, $88.1 million of Wisconsin Health and Educational Facilities Authority, yielded 4.05% with a 5% coupon in 2041. The bonds are callable at par in 2021.
Wells Fargo Securities priced $285 million of New Jersey’s Garden State Preservation Trust open space and farmland preservation refunding bonds, rated Aa3 by Moody’s and AA-minus by Fitch. Pricing details were not available by press time.
Morgan Stanley priced $170.7 million of Pennsylvania Industrial Development Authority economic development revenue refunding bonds, rated A1 by Moody’s, A-minus by Standard & Poor’s, and A by Fitch.
Yields ranged from 1.04% with a 4% coupon in 2014 to 2.85% with a 5% coupon in 2021. Credits maturing in 2013 were offered via sealed bid.
In the competitive market, Milwaukee auctioned $227.5 million of general obligation securities in three pricings. The first two consist of $117.9 million and $9.63 million rated Aa2 by Moody’s and AA by Standard & Poor’s. The third pricing consists of $100 million of short-term notes rated M1G-1 by Moody’s and SP-1-plus by Standard & Poor’s.
JPMorgan won the bid for $117.9 million. BMO Capital Markets won the bid for $9.63 million. Pricing details were not available by press time.
Of the $100 million of short-term promissory notes, JPMorgan won the bid for $40 million. The notes yielded 0.14% with a 3% coupon. Bank of America Merrill Lynch won the bid for two sets of $30 million - each yielding 0.13% and 0.14% with 1.25% coupons.
