NEW YORK – The tax-exempt market is holding firmer ground despite an uptick in supply. Deals are being well received in the market place and secondary trading activity is stronger.
“So far, so good,” a Los Angeles trader said, referring to the $2 billion California deal being priced for retail. “I think there are a lot of orders, but there are a lot of bonds to fill.”
He added, “We are certainly seeing order flow and there are a lot of people sitting on cash so they are putting it to work. We’ll see if the demand matches the supply.”
Munis were steady to firmer early Tuesday afternoon, according to the Municipal Market Data scale. Yields inside eight years were steady while yields outside nine years fell up to two basis points.
On Monday, the two-year yield ended steady at 0.26%, its record low as recorded by MMD on Feb. 16. The 10-year and the 30-year yields fell two basis points each to 1.85% and 3.23%, respectively.
Treasuries were steady after firming Tuesday morning. The two-year and 30-year yields were flat at 0.29% and 3.05%. The benchmark 10-year yield fell one basis point to 1.92%.
In the primary market, JPMorgan priced for retail $2 billion of California various purpose general obligation refunding bonds, rated A1 by Moody’s Investors Service and A-minus by Standard & Poor’s and Fitch Ratings. Pricing details were not available by press time.
RBC Capital Markets priced $350 million of California Department of Water Resources Central Valley Water Project System revenue bonds in three series, rated Aa1 by Moody’s and AAA by Standard and Poor’s. Pricing information was not yet available.
Morgan Keegan held preliminary pricing for $170.3 million of Lamar, Texas, Consolidated Independent School District bonds in two series, backed by the Texas Permanent School Fund Guarantee Program. The underlying rating is Aa2 by Moody’s and AA by Standard & Poor’s.
Yields on the first series, $124.8 million of unlimited tax schoolhouse and refunding bonds, ranged from 0.50% with a 1% coupon in 2015 to 3.50% with a 5% coupon in 2045. The bonds are callable at par in 2022.
Yields on the second series, $45.5 million of unlimited tax refunding bonds, ranged from 0.62% with a 3% coupon in 2016 to 2.29% with a 5% coupon in 2024. The bonds are callable at par in 2022.
Bank of America Merrill Lynch priced for institutions $153.7 million of Maine Turnpike Authority revenue bonds following a retail order period Monday. The bonds are rated Aa3 by Moody’s and AA-minus by Standard & Poor’s and Fitch.
Yields on the first series, $69.3 million, ranged from 0.64% with a 2% coupon in 2015 to 3.68% with a 5% coupon in 2042. The bonds are callable at par in 2022.
Yields on the second series, $84.4 million, ranged from 0.44% with a 5% coupon in 2014 to 3.80% with a 3.75% coupon in 2033. The debt is callable at par in 2022.
In the competitive market, Washington priced $551.6 million of GOs in two pricings of $357.8 million and $193.8 million. The credit is rated Aa1 by Moody’s and AA-plus by Standard & Poor’s.
Citi won the bid for $357.8 million. Pricing information was not available.
Bank of America Merrill Lynch won the bid for $193.8 million. Yields ranged from 0.13% with a 4% coupon in 2013 to 3.83% with a 4% coupon in 2042. Credits maturing in 2014, 2015, 2030, and 2031 were sold but not available. The bonds are callable at par in 2022.
Bank of America Merrill Lynch won the bid for $157 million of Dekalb County, Ga., short-term tax anticipation notes, rated M1G-1 by Moody’s. The bonds yielded 0.22% with a 1% coupon in 2012.
In the secondary market, trades reported by the Municipal Securities Rulemaking Board showed firming.
A dealer sold to a customer New Jersey’s Tobacco Settlement Financing Corp. 5s of 2029 at 6.20%, 10 basis points lower than where they traded last Friday.
Bonds from an interdealer trade of Orlando Capital Improvement 5s of 2027 yielded 2.99%, eight basis points lower than where they traded Monday.
Bonds from another interdealer trade of Port of Seattle 5s of 2031 yielded 3.38%, two basis points lower than where they traded last Friday.
A dealer sold to a customer Golden State Tobacco Securitization Corp. 4.5s of 2027 at 6.23%, two basis points lower than where they traded Monday.