NEW YORK – The tax-exempt market is struggling to get a firm footing Tuesday morning as traders say the market is much weaker and many deals are struggling to get done.

“All in all munis feel like they have a weaker tone,” a New Jersey trader said. “It’s possible the institutional buyers took their January and February coupons, reinvested them, and now they are just content to sit and hope rates get more attractive.”

He added the New York City Municipal Water Finance Authority deal was not going well. “I’m a little surprised by the pricing,” he said. “The bonds that were not available during retail look like they might be having trouble and they are priced significantly cheaper. The spreads are significantly wider than what we were looking at during retail. So it will be interesting to see how that goes.”

Munis continued to weaken Tuesday morning for the second trading session, according to the Municipal Market Data scale. Yields inside three years were steady while four- to 10-year yields rose up to three basis points, 11- to 17-year yields jumped between two and four basis points. Outside 18 years, yields spike up to three basis points.

On Monday, the two-year yield ended flat at 0.26%, its record low first recorded by MMD on Feb. 16. The 10-year yield jumped three basis points to 1.94% while the 30-year yield rose one basis point to 3.28%.

Treasuries were much stronger Tuesday morning. The two-year yield fell one basis point to 0.29%. The benchmark 10-year and the 30-year yields dropped six basis points each to 1.94% and 3.07%, respectively.

In the primary market, Barclays Capital is expected to price for retail $1.5 billion of Puerto Rico improvement refunding bonds, rated Baa1 by Moody’s Investors Service, BBB by Standard & Poor’s, and BBB-plus by Fitch Ratings.

Morgan Stanley is expected to price $511.2 million of Houston, Texas, Airport System refunding bonds, rated A by Standard & Poor’s and A-plus by Fitch.

M.R. Beal & Co. priced for institutions $502.2 million of New York City Municipal Water Finance Authority water and sewer system second general resolution revenue bonds after a retail order period Monday. The credit is rated Aa2 by Moody’s and AA-plus by Standard & Poor’s and Fitch. Details were not available.

JPMorgan priced for retail $212.6 million of Columbus, Ohio, general obligation bonds, rated triple-A by the rating agencies. Pricing was not available.

In the competitive market, Virginia College Building Authority plans to auction $160.5 million of revenue bonds, rated AA-plus by Fitch.

San Francisco is also expected to auction $234.8 million in two deals – $115 million and $119.8 million – rated Aa2 by Moody’s and AA-minus by Standard & Poor’s.

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