NEW YORK – The tax-exempt market appears to have stabilized after Monday’s double digit fall in municipal bond yields. The new issue market is being priced well with underwriters lowering yields in repricing.

“The tone is definitely stable from yesterday’s levels,” a New York trader said. “There has not been a big push in the past few hours as Treasuries started to go lower again.”

He added in the primary market, the New York City Transitional Finance Authority deal was bumped this morning from Monday’s levels based on the overall movement in the market. Surprisingly, the California deal “seems a little slow for the first day,” he said.

In the secondary market, trading volume seems moderate, he added.

Munis were firmer Tuesday early afternoon, according to the Municipal Market Data scale. Yields inside three years were steady while the four- to eight-year yields fell up to two basis points. Outside nine years, yields fell between one and three basis points.

On Monday, the two-year yield dropped three basis points to 0.33% while the 30-year yield fell seven basis points to 3.35%. The 10-year yield plunged 15 basis points to 1.97%, falling below 2.00% for the first time since March 6.

Treasuries continued to strengthen after a rally that began last Friday. On Tuesday, the two-year yield fell three basis points to 0.29%. The benchmark 10-year yield and the 30-year yield each dropped seven basis points to 1.97% and 3.11%.

In the primary market, Morgan Stanley priced $1.3 billion of California various purpose general obligation bonds, rated A1 by Moody’s Investors Service and A-minus by Standard & Poor’s and Fitch Ratings.

Yields on the first series, $890 million of new money for infrastructure projects, ranged from 0.68% with a 3% coupon in 2014 to 4.45% with a 4.375% coupon in 2042. Credits maturing in 2035 and portions of 2042 were not offered for retail. The bonds are callable at par in 2022.

Yields on the second series, $410.2 million of refunding bonds, ranged from 0.68% with 3% and 4% coupon in a split 2014 maturity to 3.17% with a 5% coupon in 2024. Portions of credits maturing in between 2014 and 2022 were not offered for retail. The bonds are callable at par in 2022.

Barclays Capital held its second day of retail for $800 million of New York City Transitional Finance Authority future tax-secured bonds and subordinate bonds, rated Aa1 by Moody’s and AAA by Standard & Poor’s and Fitch. Institutional pricing is expected Wednesday.

Pricing information was not available by press time. In the first day of retail pricing, yields ranged from 0.40% with 2.5% and 4% coupons in a split 2014 maturity to 3.90% with a 4% coupon in 2042. Credits maturing between 2023 and 2026, between 2028 and 2031, and in 2037 and 2041 were not offered for retail. The bonds are callable at par in 2022.

Barclays priced for retail $555 million of Connecticut taxable and tax-exempt general obligation bonds, as well as SIFMA index bonds, rated Aa3 by Moody’s and AA by Standard & Poor’s and Fitch. Pricing details were not available.

Goldman, Sachs & Co. priced $237.2 million of Agriculture Improvement and Power District refunding revenue bonds for the Arizona Salt River Project Electric System. The issue is rated Aa1 by Moody’s and AA by Standard & Poor’s.

The bonds yielded 3.05% with a 5% coupon in 2029, 3.09% with a 5% coupon in 2030, and 3.14% with a 5% coupon in 2031. Yields were lowered three to five basis points from preliminary pricing. The bonds are callable at par in 2022.

In the competitive market, Barclays won the bid for $240.1 million of Los Angeles GO bonds. Details were not yet available.

In the secondary market, trades reported by the Municipal Securities Rulemaking Board showed firming over the past several trading sessions. A dealer bought from a customer New York City Municipal Water Finance Authority 5s of 2026 at 2.83%, 23 basis points lower than where they traded a week ago.

A dealer sold to a customer District of Columbia 3s of 2013 at 0.38%, 17 basis points lower than where they traded Monday. A dealer bought from a customer Pennsylvania’s State Public School Building Authority 5s of 2033 at 0.41%, three basis points lower than where they traded last Wednesday.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.