NEW YORK – The tax-exempt market continued to firm Thursday, continuing the steady to firmer tone seen all week.
On larger deals in the primary market, yields were lowered in repricings. But one market participant said smaller deals aren’t seeing the same kind of interest.
“I am seeing a fair amount of repricing higher on yields on some of these smaller deals I’ve been looking at,” a Minnesota portfolio manager said, referring to several $10 million to $12 million deals that came to market this week. “I am seeing more change on the long end.”
He added deals are also being restructured. “Coupons are moving down to 3% to appease retail or moving up to 5% for the institutional guys.”
Munis were firmer again Thursday afternoon, according to the Municipal Market Data scale. Yields inside 12 years were steady while yields outside 13 years fell between one and three basis points.
On Wednesday, the two-year yield closed flat at 0.31% for the 11th consecutive trading session. The 10-year yield dropped two basis points to 1.85% while the 30-year fell three basis points to 3.22%.
Treasury yields drifted slightly higher. The benchmark 10-year yield and the 30-year yield each rose one basis point to 1.93% and 3.12%. The two-year was steady at 0.28%.
In the primary market, Morgan Stanley priced and repriced $152.3 million of Orange County, Fla., Health Facilities Authority hospital revenue bonds, rated A2 by Moody’s Investors Service and A by Standard & Poor’s and Fitch Ratings.
The bonds yield 4.125% with a 4% coupon in 2028, 4.273% with a 4.125% coupon in 2032, and 4.45% with a 5% coupon in 2042. Yields were lowered two basis points from preliminary pricing. The bonds are callable at par in 2022.