NEW YORK – The tax-exempt market is much stronger Thursday as buyers are eating up new deals in the primary market and bonds that were issued earlier this week are already trading higher in the secondary.

“It seems like the market is feeling cyclical,” a New Jersey traded said. “It didn’t feel well, and then it rallied and came back. So it’s frustrating in that way.”

He added there was buying when new deals came to market and most were very well received. He noted a New York City Municipal Water Finance Authority bond with a 5% coupon came to market at 3.95% and it is trading on the secondary at 3.80% Thursday. So, “the secondary is firmer today.”

Munis continued to see many price bumps across the curve, according to the Municipal Market Data scale. Yields inside three years were steady, while yields on the four-year to 10-year fell as much as three basis points. The 11-year yields fell between two and four basis points. Outside 12-years, yields fell between one and five basis points.

On Wednesday, the two-year muni yield closed steady at 0.35% for its ninth consecutive trading session. The 10-year muni yield fell five basis points to 1.82% and the 30-year yield dropped six basis points to 3.60%.

Treasuries were mostly flat from morning trading levels but still firmer than Wednesday’s session. The two-year yield fell two basis points to 0.22% and the benchmark 10-year yield dropped four basis points to 1.95%. The 30-year fell one basis point to 3.12%.

In the primary market, Bank of America Merrill Lynch priced $368.2 million of Illinois Finance Authority revenue bonds for the University of Chicago. This deal comes after the university priced $190 million of taxable fixed-rate bonds Tuesday. The bonds are rated Aa1 by Moody’s Investors Service, AA by Standard & Poor’s, and AA-plus by Fitch Ratings.

Yields ranged from 0.15% with a 2.5% coupon in 2012 to 3.90% with a 5% coupon in 2051. The bonds are callable at par in 2021.

In the secondary market, trades reported by the Municipal Securities Rulemaking Board showed firming in just one day of trading.

A dealer sold to a customer Greater Arizona Development Authority 5s of 2035 at 3.33%, 18 basis points lower than where they traded Wednesday.

Bonds from an interdealer trade of Wisconsin 5s of 2027 yielded 2.57%, 15 basis points lower than where they traded the day prior.

A dealer sold to a customer Port Authority of New York and New Jersey 4s of 2033 at 3.68%, nine basis points lower than where they traded the previous day.

Another dealer sold to a customer Puerto Rico Sales Tax Financing Corp. 5s of 2040 at 4.02%, six basis points lower than where they traded Wednesday.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.