NEW YORK – The tax-exempt market was weaker, following Treasuries, ahead of a large day of new issuance in the municipal market. Munis and Treasuries have been weakening this week after hitting a wall of record low yields on Friday.
Munis were weaker for the second session on Tuesday morning, according to the Municipal Market Data scale. Yields inside five years were steady while yields outside six year rose as much as three basis points.
On Monday, the 10-year yield rose one basis point to 1.76%, nine basis points above its record low of 1.67% set Jan 18. The 30-year yield also increased one basis point to 3.05%, one basis point above the record low of 3.04% set Friday. The two-year yield was steady at 0.32% for the second session.
Treasuries were much weaker for the second session. The benchmark 10-year yield rose four basis points to 1.57% while the 30-year yield jumped five basis points to 2.62%. The two-year yield hovered around 0.26%.
In the negotiated market, Wells Fargo Securities is expected to price the largest deal of the week, $1.1 billion of Los Angeles County tax and revenue anticipation notes in three series. The notes are rated MIG-1 by Moody’s Investors Service, SP-1-plus by Standard & Poor’s and F1-plus by Fitch Ratings.
Goldman, Sachs & Co. is expected to hold is second day of retail pricing for $800 million of New York City Transitional Finance Authority future tax-secured and tax-exempt subordinate bonds in two series. The bonds are rated Aa1 by Moody’s and AAA by Standard & Poor’s and Fitch.
On the first day of retail pricing Monday, yields ranged from 0.55% with 2%, 4%, and 5% coupons in a split 2015 maturity to 3.36% with a 4% coupon in 2039. Credits maturing in 2014 were offered via sealed bid. Bonds maturing from 2024 to 2026, 2028 to 2030, and 2034 to 2038 were not offered for retail. The bonds are callable at par in 2022.
Barclays Capital is expected to price $300 million of Metropolitan Washington Airports Authority airport system revenue refunding bonds, rated Aa3 by Moody’s and AA-minus by Standard & Poor’s and Fitch.
Bank of America Merrill Lynch is expected to price for retail $259 million of New Jersey Higher Education Assistance Authority bonds. The senior series is rated Aa2 by Moody’s and AA by Standard & Poor’s. The subordinate series is rated A2 by Moody’s and A by Standard & Poor’s.
On the competitive calendar, Minnesota’s triple-A rated Metropolitan Council is expected to auction $223.5 million of general obligation bonds in four pricings - $65 million, $57.6 million, $7 million, and $93.9 million.
Maryland’s Anne Arundel County is expected to sell $194.6 million of GOs in two pricings - $142 million and $52.6 million.