NEW YORK – The tax-exempt market is stronger Tuesday as munis follow Treasuries higher and also rally on limited supply.
“It is certainly stronger today,” a New York trader said. “Supply is very low. It’s under $4 billion this week.”
He added that munis are following Treasuries higher and in some areas, munis are outperforming Treasuries. “The belly of the curve got killed the past few weeks but it’s outperforming today.”
Munis were stronger Tuesday early afternoon, according to the Municipal Market Data scale. Yields inside three years were steady while the four- and five-year yields fell up to two basis points. The six- to 13-year yield plummeted three to eight basis points while yields outside 14-year fell between one and four basis points.
On Monday, the two-year yield finished steady at 0.36% while the 30-year yield closed flat at 3.40%. The 10-year yield dropped three basis points to 2.14%.
Treasuries were also stronger Tuesday. The two-year yield fell three basis points to 0.33% while the benchmark 10-year yield dropped five basis points to 2.19%. The 30-year yield fell one basis point to 3.31%.
In the primary market, Wells Fargo priced for retail $200 million of Rochester, Minn., health care facilities revenue bonds for the Mayo Clinic. The bonds are rated Aa2 by Moody’s Investors Service and AA by Standard & Poor’s. Pricing details were not yet available.
Wells Fargo priced $123.2 million of Arizona Board of Regents tax-exempt and taxable bonds for the University of Arizona. Pricing was not available by press time.
In the competitive market, PNC Capital Markets won $120 million of Temple University, Pa., short-term notes, rated M1G-1 by Moody’s. The bonds yielded 0.21% with a 1.25% coupon.
Wells Fargo won the bid for $98 million Cobb County, Ga., short-term notes rated SP-1-plus by Standard & Poor’s and F-1-plus by Fitch Ratings. The bonds yielded 0.12% with a 1.5% coupon
In the secondary market, trades reported by the Municipal Securities Rulemaking Board showed firming.
A dealer bought from a customer Georgia 5s of 2017 at 0.68%, 13 basis points lower than where they traded the week prior.
Another dealer bought from a customer New Jersey’s Tobacco Settlement Financing Corp. 4.5s of 2023 at 5.25%, five basis points lower than where they traded the week before.
A dealer sold to a customer Illinois 5s of 2034 at 4.46%, three basis points lower than where they traded the week prior.
A dealer bought from a customer Durham, N.C., Capital Financing Corp. 5s of 2030 at 3.77%, one basis point lower than where they traded a week before.