The tax-exempt market focused on secondary trading Wednesday afternoon as traders said activity was finally starting to pick back up after a few quiet weeks.
"The last big trading days were around the payroll number two weeks ago and then it went back to being dead quiet," a Chicago trader said. "But this morning there was a lot firmer tone and a better feel."
While the secondary market seemed to take the attention mid-week, this trader added there were more than 40 deals that were larger than $100 million in the primary. "People are focused on that too."
This trader also noted that the market has seen six consecutive weeks of outflows, and he views that as bullish for the market. "Truthfully I start to look at extended weeks of outflows as a bullish indicator," he said. "Retail is the last to the party. So by the time you see six to seven weeks of outflows, munis are up 30 basis points."
In addition, heavy redemptions for May and June are supportive for the market. "Redemptions are always very large and so there is some support. And as an asset class, we are still cheap in relation to taxables."
Back in the primary market, Bank of America Merrill Lynch priced $212.8 million of Georgia Development Authorities pollution control revenue bonds for the Oglethorpe Power Corp. projects. The bonds are rated Baa1 by Moody's and A by Standard & Poor's and Fitch.
Bond in the first series, $40.5 million of Development Authority of Appling County, were priced at par to yield 2.4% in 2038.
Bonds in the second series, $114.6 million of Development Authority of Burke County, were priced at par to yield 2.4% in 2040.
Bonds in the third series, $57.7 million of Development Authority of Monroe County, were priced at par to yield 2.4% in 2039.
Bank of America Merrill Lynch also priced $170.7 million Charlotte, N.C., certificates of participation. The credit is rated Aa2 by Moody's and AA-minus by Standard & Poor's and Fitch.
Bonds in the first series of $122.7 million yielded 2.39% and 2.49% with 3% coupons in a split 2022 maturity.
Yields on the second series of $48 million ranged from 0.49% with a 4% coupon in 2015 to 3.24% with a 5% coupon in 2033. Bonds maturing in 2014 were offered via sealed bid. The bonds are callable at par in 2023.
Municipal bond scales ended on a mixed note Tuesday after a firmer session Monday.
Yields on the Municipal Market Data triple-A GO scale ended as much as one basis point higher. The 30-year yield increased one basis point to 2.93%. The 10-year yield finished flat at 1.72% for the third session and the two-year closed steady at 0.29% for the eighth session.
Yields on the Municipal Market Advisors 5% coupon triple-A benchmark scale ended mixed, with some yields rising and some yields falling as much as one basis point in either direction. The 10-year was steady at 1.78% for the second session and the 30-year was flat at 3.05% for the third session. The two-year was flat at 0.32% for the eighth session.
Treasuries posted gains Wednesday and equities slid across the board. The benchmark 10-year yield dropped three basis points to 1.69% and the 30-year yield slid five basis points to 2.86%. The two-year was steady at 0.23%.