The tax-exempt market was in wait-and-see mode as all the biggest deals had been priced and traders waited to view final allotments.
"It's slow," a Chicago trader said. "It's seriously slowing down. Most of the primary is out of the way. Big issues were priced so everyone is waiting to see. And there were big deals yesterday because it's a shortened week."
He added that in order to get deals in the primary, you have to pay the price. "Deals are going at a price because in all honesty, if you buy a new issue you can say that was how it was priced. But if you buy in the secondary, there is subjective criticism."
He continued that with rates so low, most traders are concerned about overpaying. If he buys in the primary, he knows he is paying what other traders have to pay.
In the primary market, Bank of America Merrill Lynch priced for institutions $818.3 million of Dormitory Authority of the State of New York personal income tax revenue bonds, rated AAA by Standard & Poor's and AA by Fitch Ratings.
Yields on the first series, $763.6 million of tax-exempt bonds, ranged from 0.31% with 2% and 5% coupons in a split 2014 maturity to 3.20% with a 5% coupon in 2042. Credits maturing in 2013 were offered via sealed bid. The bonds are callable at par in 2022. Credits maturing in 2022 are not callable. Yields were lowered two basis points from retail pricing on credits maturing in 2019 and 2021 and five basis points on those maturing in 2020.
Yields on the second series, $54.7 million of tax-exempt bonds, ranged from 0.36% with a 2.5% coupon in 2014 to 3.28% with a 5% coupon in 2037. The bonds are callable at par in 2022. Yields were increased from retail pricing four and five basis points on bonds maturing between 2028 and 2034 and lowered two basis points on bonds maturing in 2037.
Jefferies & Co. priced for institutions $890.4 million of Massachusetts School Building Authority senior dedicated sales tax refunding bonds, rated Aa1 by Moody's Investors Service and AA-plus by Standard & Poor's and Fitch.
Yields ranged from 0.73% with 3% and 4% coupons in a split 2017 maturity to 3% priced at par in 2030. The bonds are callable at par in 2022. Yields were lowered as much as three basis points from retail pricing.
Morgan Stanley priced and repriced $300 million of Los Angeles Department of Water and Power power system revenue bonds, following a $350 million issue priced by JPMorgan on Wednesday. The bonds are rated Aa3 by Moody's and AA-minus by Standard & Poor's and Fitch.
The bonds yielded 0.58% with 3%, 4%, and 5% coupons in a split 2016 maturity. The bonds are callable at par in 2015. Yields were lowered three basis points from preliminary pricing.
In the competitive market, Maryland University Systems auctioned $173.8 million of revenue bonds in two pricings - a $115 million deal followed by a $58.8 million deal. The bonds are rated Aa1 by Moody's and AA-plus by Standard & Poor's.
Citi won the bid for $115 million. JPMorgan won the bid for $58.8 million. Pricing details were not available by press time.
On Wednesday, the 10-year Municipal Market Data yield and the 30-year yield finished flat at 1.70% and 2.87%, respectively. The two-year closed flat for the 11th session at 0.30%.
The 10-year yield now trades 10 basis points above its record low of 1.60% set July 26. The 30-year yield is up eight basis points from its record low of 2.79% hit July 25.
Treasuries pared most of the morning losses. The benchmark 10-year yield was up only one basis point to 1.70%. The two-year and 30-year yields were steady at 0.27% and 2.89%, respectively.