NEW YORK – The tax-exempt market continued to play off of Treasuries as fears out of Europe drive global markets.
While munis followed Treasuries higher on the risk-off trade, many traders noted muni yields had hit a floor.
“Munis have run up a few basis points in the last few days and I would have thought they would run up more,” a New York trader said. “But they have run up so far that it’s hard to get a bid on them. Everyone wants to sell at the highs but there are no buyers. The bid side is the same.”
He added there’s not a whole lot of volume in the new issue market today, but are a few New York area deals coming. “Hopefully we’ll see those priced right and people will get more interested.”
Munis were steady to firmer Thursday, afternoon, according to the Municipal Market Data scale. Yields inside six years were steady while yields outside seven years fell as much as two basis points.
On Wednesday, the 10-year yield fell three basis points to 1.80% while the 30-year yield dropped four basis points to 3.10%. The two-year yield closed steady at 0.33% for the sixth consecutive trading session.
Treasuries were stronger Thursday, although yields came up off their record lows set this morning. The benchmark 10-year yield fell three basis points from Wednesday’s close to 1.59% while the 30-year yield dropped four basis points to 2.67%. The two-year yield fell one basis point to 0.27%.
In the primary market, Morgan Stanley priced $173.5 million of Massachusetts Educational Financing Authority educational loan revenue bonds, rated AA by Standard & Poor’s and A by Fitch Ratings.
Yields ranged from 3.10% priced at par and 3.10% with a 5% coupon in a split 2018 maturity to 4.95% with a 5% coupon in 2030. The bonds are callable at par in 2021.
In the competitive market, Citi won the bid for $600 million of Virginia Transportation Board revenue bonds, rated Aa1 by Moody’s Investors Service and AA-plus by Standard & Poor’s and Fitch. Pricing details were not available by press time.
Wells Fargo Securities won the bid for $113.7 million of triple-A rated Massachusetts Water Pollution Abatement Trust revenue bonds. The auction follows a $250 million pricing launched earlier this week in the negotiated market.
Yields on the first series of $76.9 million ranged from 2.20% with a 5% coupon in 2025 to 3.324% with a 3.25% coupon in 2030 Credits maturing in 2029 and 2031 were not formally re-offered. The bonds are callable at par in 2020.
Yields on the second series, $36.8 million of refunding bonds, ranged from 2.29% with a 5% coupon in 2025 to 2.74% with a 5% coupon in 2031. The bonds are callable at par in 2022.
In the secondary market, trades reported by the Municipal Securities Rulemaking Board showed firming over the past week.
A dealer sold to a customer Massachusetts 4.2s of 2021 at 2.34%, 21 basis points lower than where they traded the day before.
A dealer sold to a customer New York City Industrial Development Agency 5s of 2035 at 4.04%, 13 basis points lower than where they traded a week ago.
Another dealer sold to a customer Los Angeles 5s of 2024 at 0.31%, nine basis points lower than where they traded a week prior.
A dealer bought from a customer Pennsylvania 5s of 2023 at 2.18%, eight basis points lower than where they traded last week.
