The tax-exempt market opened firmer Thursday morning as bond prices rose for the third consecutive session.
Traders said new-deals were well received, even after the 10-year Municipal Market Data yield fell to its lowest in four months on Wednesday.
“It’s stronger again today,” a New York trader said. “The new issues went well and the secondary is fairly strong as well. I have some seven- to eight-year bonds out for the bid and I’m expecting decent bids for them.”
Most of the week’s largest new deals were priced Tuesday and Wednesday. Later Thursday, Citi is expected to price for institutions $122 million of Tennessee Housing Development Agency residential finance program bonds in two series, rated Aa1 by Moody’s Investors Service and AA-plus by Standard & Poor’s.
In retail pricing Wednesday, the first series, $32 million of bonds subject to the alternative minimum tax, were priced at par to yield 1.20% and 1.30% in a split 2016 maturity and 1.65% and 1.75% in a split 2017 maturity. Bonds maturing in 2014 and 2015 were offered via sealed bid and those maturing in 2043 were not offered for retail. The bonds are callable at par in 2023.
The second series, $90 million of non-AMT bonds, were priced at par to yield 1.75% and 1.85% in a split 2018 maturity to 4.70% in 2033. Bonds maturing in 2043 were not offered for retail and all bonds are callable at par in 2023.
On Wednesday, yields on the triple-A Municipal Market Data scale ended as much as four basis points stronger following a four basis point rally Tuesday. The 10-year and 30-year yields fell four basis points each to 2.53% and 4.15%, respectively. The two-year was steady at 0.35% for the ninth session.
Yields on the Municipal Market Advisors benchmark scale also ended as much as four basis points firmer. The 10-year yield fell four basis points to 2.69% and the 30-year yield slid three basis points to 4.29%. The two-year yield fell one basis point to 0.54%.
Treasuries were slightly weaker across the curve. The benchmark 10-year and 30-year yields rose one basis point each to 2.51% and 3.60%, respectively. The two-year yield increased one basis point to 0.32%.