The municipal market picked up speed as Wednesday's session crossed over into the afternoon.
Cash-heavy, bond-hungry investors, facing aggressively priced competitive deals and limited supply in the secondary have been driving a rally, pushing yields as much as several basis points lower at the long end of the curve. As the tax-exempt market has
"It's surprisingly strong today," he said. "The secondary market's running out of supply. A whole lot of things are getting picked up that have been sitting around. There's some first-of-the-month money being put to work."
Investors anticipate a small calendar this week. Potential long-term volume is expected to total $1.79 billion, up from a negligible $10.8 million last week. Some market analysts, though, anticipate the calendar will reach about $2.5 billion this week.
In the competitive market Wednesday, Bank of America Merrill Lynch won $200 million of New Jersey Educational Facilities Authority Princeton University revenue bonds. The bonds are rated triple-A by the major credit rating agencies.
Yields range from 0.385% with a 5.00% coupon in 2016 to 4.12% with a 5.00% coupon in 2044. The bonds are callable at par in 2024.
"It's a very strong credit," a trader in New Jersey said. "And you've got scarcity value, so my suspicion is that it came at a very aggressive set of yields."
Meanwhile, Ohio plans to auction $150 million of infrastructure improvement general obligation bonds.
In the negotiated market, B of A Merrill priced the $41.9 million taxable leg of a total $97.5 million of Columbus, Ohio, GOs. The bonds are rated triple-A by the major credit rating agencies.
Yields in the first series, $30.8 million of various purpose unlimited tax refunding bonds, range from 0.375% priced at par in 2015 to 1.869% priced at par in 2018. They are priced to yield between 28 and 45 basis points over comparable Treasuries.
Yields in the second series, $11 million of various purpose limited tax refunding bonds, range from 0.34% priced at par in 2015 to 1.869% priced at par in 2018. They are priced to yield between 28 and 45 basis points over comparable Treasuries.
Yields on the Municipal Market Data triple-A scale Wednesday are steady through eight years. Thereafter, they've fallen by up to four basis points, with the greatest strength seen in maturities beyond 23 years.
Triple-A, tax-exempt yields ended Tuesday stronger past the front end of the curve. The 10-year triple-A tax-exempt yield fell three basis points Tuesday to 2.75%. The 30-year dipped two basis points to 4.17%, while the two-year yield remained at 0.34%.
The Municipal Market Advisors benchmark triple-A scale curve flattened as yields descended Tuesday by as much as six basis points. The 10-year triple-A yield slipped three basis points to 2.75%. The 30-year plunged six basis points to 4.34%, while the two-year held at 0.35%.
Treasury yields have weakened across the curve Wednesday. The 10-year yield has risen five basis points to 3.00%.
The 30-year has climbed three basis points to 3.92%. The two-year yield has increased two basis points to 0.43%.
