NEW YORK – The tax-exempt market is looking to the biggest deals on the calendar Wednesday for direction.

“There is a very large Maryland general obligation pricing that will set the tone for the rest of the day,” a New York trader said. “Everyone is waiting around.”

He added that “it’s a little too early to tell” where the market is Wednesday morning, but it feels unchanged to slightly weaker. “But that could all change after the Maryland GOs.”

Munis were steady to weaker Wednesday morning, according to the Municipal Market Data scale. Yields inside eight years were steady while the nine- to 11-year yields rose one basis point. Yields were steady outside 12 years.

On Tuesday, the two-year yield ended flat at 0.26%, its record low first recorded by MMD on Feb. 16. The 10-year yield jumped four basis points to 1.98% while the 30-year yield rose one basis point to 3.29%.

Treasuries were weaker Wednesday morning. The two-year yield rose one basis point to 0.30%. The benchmark 10-year yield and the 30-year yield increased two basis points each to 1.97% and 3.10%.

In the primary market, Barclays Capital repriced $2.3 billion of Puerto Rico improvement refunding bonds, rated Baa1 by Moody’s Investors Service, BBB by Standard & Poor’s, and BBB-plus by Fitch Ratings.

Yields ranged from 4.00% with 4% and 5% coupon in 2020 to 5.32% with a 5% coupon in 2041. The bonds are callable at par in 2022. Prices were bumped two to three basis points from preliminary pricing. The deal was upsized from $1.7 billion and institutional pricing was pushed up a day.

Siebert Brandford Shank & Co. is expected to price $252 million of Detroit Public Schools refunding bonds. The school system itself is junk-rated, but Moody’s Investors Service rated it Aa2 based on its participation in the Michigan School Bond Qualification and Loan Program.

In the competitive market, Maryland is expected to auction $680.2 million of general obligation bonds in two offerings – a $543.9 million deal follow by a $136.3 million deal. The credit is rated triple-A.

The competitive pricing comes after a $150 million negotiated deal that was priced earlier in the week by Bank of America Merrill Lynch.

The New York Metropolitan Transportation Authority is expected to auction $400 million of revenue bonds in four pricings – a $250 million deal and three $50 million deals. The credit is rated A2 by Moody’s and A by Standard & Poor’s and Fitch.


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