The selloff in the tax-exempt market slowed Thursday afternoon as traders said munis started to bottom out and the recent spike in yields started to attract retail buyers back into the market.
"It feels like the market has stabilized a bit and retail has come in a little," a Texas trader said. "Retail bid wanteds have been heavy. Today it's not as much but some of this yield backup seems to have sparked retail interest a bit."
This trader added that the selloff could be limited. "You won't see a 200 basis point back up in yields. But if it's 50 basis points, money will come back in. And we are off now about 37 basis points for May and we are starting to see some signs of retail becoming more interested."
In the primary market, JPMorgan priced for institutions $500 million of New York's Metropolitan Transportation Authority revenue bonds, rated A2 by Moody's Investors Service and A by Standard & Poor's and Fitch Ratings.
Yields ranged from 0.16% with a 2% coupon in 2013 to 4.17% with a 4% coupon in 2043. Credits maturing between 2024 and 2030 are callable at par in 2018. The remainder of the issue, except credits maturing in 2023, are callable at par in 2023.
Yields were lowered two basis points on bonds maturing in 2016 but were raised as much as eight basis points on bonds maturing between 2017 and 2023. Yields on bonds maturing in 2031 and 2032 were raised 15 basis points and 14 basis points, respectively. Yields on bonds maturing in 2038 and 2042 were raised 11 basis points and nine basis points, respectively. Bonds maturing in 2033 and 2043 were oversubscribed in retail pricing and yields were subsequently lowered one and three basis points, respectively.
Bank of America Merrill Lynch priced $120 million of Clark County, Nev., airport system junior subordinate lien revenue notes, rated MIG-1 by Moody's and SP-1-plus by Standard & Poor's. The notes yield 0.35% with a 2% coupon in 2014.
Jefferies priced $104.4 million of triple-A rated Virginia Resources Authority clean water state revolving fund revenue bonds. Yields ranged from 0.22% with a 1% coupon in 2013 to 2.58% with a 5% coupon in 2025. The bonds are callable at par in 2023.
Bonds with 5% coupons yielded 17 basis points to 28 basis points above the Municipal Market Data scale.
Yields on the Municipal Market Data scale ended Wednesday as much as eight basis points higher. The 10-year yield jumped eight basis points to 2.07% and the 30-year yield increased five basis points to 3.20%. The two-year finished flat at 0.29% for the fourth session.
Yields on the Municipal Market Advisors 5% scale ended as much as seven basis points higher. The 10-year yield jumped six basis points to 2.11% and the 30-year yield climbed five basis points to 3.31%. The two-year yield increased one basis point to 0.35%.
Treasuries were flat to slightly stronger after a choppy morning session. The benchmark 10-year yield slid two basis points to 2.11%. The two-year and 30-year yields were flat at 0.31% and 3.27%, respectively.