NEW YORK – The tax-exempt market was firmer Tuesday afternoon as at least three large deals were priced a day ahead of schedule, as a result of strong demand. Traders say the tone of the market is much stronger than it’s been.
“Munis are definitely firmer,” a Los Angeles trader said. “It feels like it’s a good week. Supply will pick up again going forward – especially in California. But the short week this week is good to get in and get deals done.”
The California Statewide Communities Development Authority revenue bonds sale for Kaiser Permanente is going very well, he said.
He added the $190 million Public Facilities Financing Authority of the city of San Diego was pushed up a day. “They did retail today and institutional and accelerated the institutional period on good demand.” The deal was originally expected to price Wednesday.
The third offering to be moved up was the New Jersey Economic Development Authority’s $1 billion cigarette tax deal, which was priced Monday instead of the scheduled Tuesday.
But, munis were slightly weaker Tuesday afternoon, according to the Municipal Market Data scale. Yields inside 10 year were steady while yields outside 11 years were flat to one basis point higher.
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 continued to strengthen Tuesday afternoon. The benchmark 10-year yield and the 30-year yield each fell four basis points to 2.17% and 3.31%. The two-year was steady at 0.33%.
In the primary market, Citi priced the largest deal of the week, $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. Pricing details were not available by press time.
Barclays priced $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. Pricing details were not yet available.
JPMorgan priced $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. Prices were not available.
In the competitive market, JPMorgan won the bid for $152.1 million of Hartford County Metropolitan District general obligation bond anticipation notes. The notes yielded 0.12% with a 2% coupon.
In the secondary market, trades reported by the Municipal Securities Rulemaking Board showed weakening over the past week.
A dealer bought from a customer Pennsylvania 5s of 2015 at 1.82%, 122 basis points higher than where they traded two weeks prior.
A dealer sold to a customer Florida Department of Transportation 5s of 2024 at 2.76%, 38 basis points higher than where they traded last week.
A dealer sold to a customer Fairfax County, Va., 5s of 2024 at 2.47%, two basis points higher than where they traded last week.
Another dealer sold to a customer Illinois taxable 4.071s of 2014 at 1.90%, two basis points higher than where they traded last week.