The tax-exempt market was driven by the primary market Wednesday as the week’s largest deal was priced for institutions. Outside the primary, traders said the market was flat.
All eyes turned to the primary market as the week’s largest deal priced for institutions. The Illinois Department of Employment Security issued $1.36 billion of unemployment insurance fund building receipts revenue bonds in two pricings. The credit is rated AA by Standard & Poor’s and AA-plus by Fitch Ratings.
JPMorgan priced the first series of $648.5 million. Yields ranged from 0.28% with a 2% coupon and 0.36% with 3% and 5% coupons in a split 2013 maturity to 1.05% with a 5% coupon and 1.13% with 4% and 5% coupons in a split 2016 maturity.
Citi priced $714 million. Pricing details were not available by press time.
Morgan Stanley priced $200.7 million of Missouri Health and Higher Educational Facilities Authority taxable educational facilities revenue bonds for The Washington University. The bond are rated triple-A. Prices were not yet available.
In the competitive market, Washington State auctioned $560.8 million of general obligation bonds in four pricings. The credit is rated Aa1 by Moody’s Investors Service and AA-plus by Standard & Poor’s and Fitch.
Citi won the bid for $274.1 million. Prices were not available.
Bank of America Merrill Lynch won the bid for $167.6 million. Yields ranged from 0.25% with a 2% coupon in 2013 to 3.65% with a 4% coupon in 2042. The bonds are callable at par in 2022.
JPMorgan won the bid for $78.5 million. The bonds yielded 0.17% with a 0.17% coupon in 2013, 0.37% with a 0.37% coupon in 2014, 0.50% with a 0.50% coupon in 2015, and 0.65% with a 0.60% coupon in 2016.
B of A Merrill won the bid for $40.6 million. Yields ranged from 0.35% priced at par in 2013 to 1.20% priced at par in 2018. Prices of bonds maturing in 2014 were not formally re-offered.
Contra Costa, Calif., Water Authority auctioned $112.5 million of revenue bonds in two pricings. The credit is rated Aa2 by Moody’s and AA-plus by Standard & Poor’s.
FTN Financial Capital Markets won the bid for $91 million. Citi won the bid for $21.5 million. Prices were not available.
As the majority of new-issue pricing got underway, traders said the market was flat and attention turned from the secondary to the primary.
“Overall I think the market is kind of flat-ish,” a Chicago trader said. “I think the new issues are doing well and the secondary stuff is moving but it’s not like its running out the door. Often times you have to give slight concession to the market, but it’s hanging in there and it’s fine.”
The trader said most activity was is in the primary. “It’s truly a primary market at this point. People are waiting to see what they get in the primary and then have a better feel.”
Munis were steady to firmer Wednesday afternoon, according to the Municipal Market Data scale. Yields inside 10 year were flat while the 11- to 24-year yields fell one basis point. Outside 25 years, yields were steady.
On Tuesday, the two-year yield closed flat at 0.31%. The 10-year yield finished steady at 1.73%, remaining six basis points above its record low of 1.67% set Jan. 18. The 30-year yield closed flat at its record low of 2.92%.
Since June 22, munis have traded steady or firmer, holding a 17-consecutive session streak of steady to lower yields. Over that time, the 10-year yield has dropped 13 basis points while the 30-year yield has plunged 24 basis points.
Treasuries were stronger across the curve. The two-year yield and the benchmark 10-year yield each fell two basis points to 0.23% and 1.48%, respectively. The 30-year yield fell one basis point to 2.58%.