NEW YORK – The tax-exempt market is holding steady despite a weakening in Treasuries and a big rally in stocks.
“It feels like an exercise bike,” said a trader in Chicago. “We are riding it like crazy and not getting anywhere.”
“Munis are hanging in and trades going on, but we are pretty much stuck at this level,” he added. “No one is real anxious to sell and for as many issues as we’ve had the past few week, munis are still reasonably stable and it’s hard to find paper that’s interesting.”
The trader added the stocks rally, which is forcing Treasuries lower, is having no effect on munis. “So far, there are no real deep trades that have given us pause to take a look at that.”
However, the Municipal Market Data scale showed a mix in munis, with the short end of the curve firming and the long end weakening. Yields on credits maturing between 2016 and 2019 fell up to three basis points. The nine- to 19-year yields were steady. Yields beyond 2030 rose up to five basis points.
On Tuesday, the two-year muni closed at 0.42% for its 19th consecutive trading session. The 10-year and 30-year closed flat at 2.22% and 3.79%, respectively.
Treasuries continued to weaken on the long end as the broader stock indexes surged over 3.40% in early afternoon trading. The benchmark 10-year yield increased five basis points to 2.06% while the 30-year yield jumped six basis points to 3.04%. The two-year yield fell one basis point to 0.26%.
The Dow Jones Industrial Average surged 3.58%, or 414.22 points, to 11,969.85.
In the primary market, Citi priced for institutions $1 billion of Puerto Rico Sales Tax Financing Corp. sales tax revenue bonds. The credit is rated Aa2 by Moody’s Investors Service and AA-minus by Standard & Poor’s and Fitch Ratings. Pricing information was not available. Citi Tuesday priced the bonds for retail.
JPMorgan priced $700 million of New York Liberty Development Corp. Liberty revenue bonds. The bonds have a provisional Aa2 rating from Moody’s. Details were not available by press time.
Goldman, Sachs & Co. priced for institutions $454 million Connecticut special tax obligation bonds. The bonds are rated Aa3 by Moody’s and AA by Standard & Poor’s and Fitch. Pricing information was not immediately available. Goldman Tuesday priced the deal for retail investors.
Ramirez & Co. priced for institutions $483.7 million of New York’s Metropolitan Transportation Authority transportation revenue bonds. The bonds are rated A2 by Moody’s and A by Standard & Poor’s and Fitch. Details were not immediately available. The deal was priced for retail investors Tuesday.
In the competitive market, Citi won the $131.9 million Virginia Public School Authority school tax credit bonds. The taxable bonds mature in 2030 with a 4.25% coupon priced at par. The bonds are priced to yield 120 basis points over Treasuries.
