All eyes in the tax-exempt market looked to Puerto Rico Electric Power Authority and Chicago O’Hare International Airport to test investor demand in the triple-B space.

Morgan Stanley issued a consensus scale for $600 million of PREPA power revenue  bonds, rated Baa3 by Moody’s Investors Service, BBB by Standard & Poor’s, and BBB-minus by Fitch Ratings. Pricing is expected Wednesday.

The bonds yielded 6.75% with a 7.25% coupon in 2030, 7% priced at par in 2033, 7.05% with a 6.75% coupon in 2036, and 7.15% with a 7% coupon in 2043. The bonds are callable at par in 2023 except bonds maturing in 2030 which are callable at par in 2018.

“People are digesting Puerto Rico today,” a New York trader said. “It might be the type of deal where the crossovers will come in.”

One Chicago trader said PREPA came cheaper than people were expecting, forcing sellers out of the secondary and into the primary. “As soon as the wire hit customer bid-wanted lists starting growing,” this trader said. “People are raising cash to buy. It could be so cheap that everyone jumps in and puts a little stability into the market.”

Bank of America Merrill Lynch priced $249.7 million of O’Hare Airport customer facility charge senior lien revenue bonds, rated Baa1 by Moody’s and BBB by Standard & Poor’s. Bonds maturing between 2028 and 2033 and portions maturing in 2043 were wrapped by Assured Guaranty Municipal Corp., and rated A2 by Moody’s and AA-minus by Standard & Poor’s,  

Yields ranged from 2.17% with a 5% coupon in 2018 to 5.75% with a 5.625% coupon and 5.95% with a 5.75% coupon in a split 2043 maturity. The bonds are callable at par in 2023.

“There is some interest on the longer-end 15 years and out,” the New York trader said. “Which coincidentally or not is the insured part.”

Also in the primary market, Barclays priced for retail $639.9 million of Regents of the University of California medical center pooled revenue bonds, rated Aa2 by Moody’s, AA-minus by Standard & Poor’s, and AA by Fitch. Institutional pricing is expected Wednesday.

Yields ranged from 0.53% with a 2% coupon in 2015 to 5% priced at par in 2043. Bonds maturing in 2014 were offered via sealed bid. Portions of bonds maturing between 2027 and 2048 were not offered for retail. The bonds are callable at par in 2023.

Monday, yields on the Municipal Market Data scale ended as much as three basis points higher. The 10-year yield rose one basis point to 2.72% and the 30-year yield increased three basis points to 4.25%. The two-year finished flat at 0.43% for the 14th consecutive session.

Yields on the Municipal Market Advisors scale ended as much as two basis points higher. The 10-year and 30-year yields rose one basis point each to 2.93% and 4.33%, respectively. The two-year was unchanged at 0.55% for the third session.

Treasuries were weaker for a second session Tuesday. The benchmark 10-year yield rose two basis points to 2.66% and the 30-year yield increased one basis point to 3.75%. The two-year was steady at 0.32%.

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