The new issue market continued to price cheap, allowing underwriters to lower yields in repricings in an overall stronger market.
"Munis are cheap so new issues are well oversubscribed," a Chicago trader said. "You have the secondary that has stayed high and no one wants to punt. But new issues are cheap and you want to buy it. So we are on firm ground."
This trader added that at the relatively high yield levels, there is more broad-based buying. "At these raw rates you've seen a wider audience for bonds. It's not just the Wells Fargo and Pimco but the insurance companies and non-traditional buyers. We'll see more continued volatility and dealers taking less exposure. There is still a general liking for the product."
Thursday, Loop Capital Markets priced $401.8 million of Dallas-Fort Worth International Airport joint revenue refunding bonds, rated A2 by Moody's Investors Service, A-plus by Standard & Poor's, and A by Fitch Ratings.
Yields ranged from 1.00% with a 5% coupon in 2015 to 5.04% with a 5% coupon in 2033. Bonds maturing in 2014 were offered via sealed bid. The bonds are callable at par in 2023 except for bonds maturing between 2022 and 2026 which are callable at par in 2021.
Bank of America Merrill Lynch priced $152.1 million of triple-A rated Tyler Independent School District, Texas, unlimited tax school building bonds. The bonds are insured by the Permanent School Fund Guarantee Program.
Yields ranged from 0.47% with a 4% coupon in 2015 to 4.39% with a 5% coupon in 2043. The bonds are callable at par in 2023. Spreads on bonds with 5% coupons ranged from three basis points to 40 basis points above the Municipal Market Data scale.
In the competitive market, Morgan Stanley won the bid for $217 million of triple-A rated Utah general obligation bonds.
Yields ranged from 0.17% with a 5% coupon in 2014 to 3.57% with a 4% coupon in 2028. The bonds are callable at par in 2022. Bonds with 5% coupons were priced with spreads ranging from one basis point to nine basis points through the MMD scale on 2014 to 2023 maturities.
Wednesday, yields on the Municipal Market Data scale ended as much as five basis points higher. The 10-year yield increased one basis point to 2.75% and the 30-year yield climbed five basis points to 4.06%. The two-year was steady at 0.52% for the fourth session.
Yields on the Municipal Market Advisors scale also ended as much as four basis points higher Wednesday. The 10-year yield rose one basis point to 2.92% and the 30-year yield rose four basis points to 4.16%. The two-year was steady at 0.56% for the third session.
Treasuries were stronger Thursday afternoon. The benchmark 10-year yield slid nine basis points to 2.59% and the 30-year yield fell four basis points to 3.65%. The two-year yield dropped three basis points to 0.34%.