NEW YORK – The tax-exempt market appears to have taken vacation early as both the primary and secondary stalled.
“It’s very quiet across the board here today,” said a trader in New Jersey. There is low volume. We haven’t even hit $500 billion yet.”
News in the primary market isn’t much different. “New issuance is taking a nice dip down due to the holiday week so it’s very quiet out there today,” he added.
Munis were gaining in Monday early afternoon trading, according to the Municipal Market Data scale. Yields were steady inside the five-year, and down one basis point on the six-year. Yields on the seven- and eight-year maturities were down up to two basis points, while the 10-year yield was down three basis points. Yields on the long-end of the curve fell two basis points.
On Friday, the two-year muni closed flat at 0.42% for its 13th consecutive trading session. The 10-year finished at 2.26% and the 30-year closed at 3.77%.
Treasuries were higher in early afternoon trading. The benchmark 10-year yield was down four points from Friday to 1.97%. The 30-year yield was down five points to 2.95%. The two-year was steady at 0.29%.
In the primary market, RBC Capital Markets priced for institutions $295 million of California Public Works Board lease revenue bonds. The bonds are rated Aa2 by Moody’s Investors Service, AA-minus by Standard & Poor’s and AA by Fitch Ratings. Retail pricing took place Friday. Pricing information was not available by press time.
The California deal “is expected to provide California investors with some diversification away from state GO debt and aversion from potential local budget cuts expected in California by year’s end,” MMD’s Domenic Vonella wrote.
Loop Capital Markets took retail orders for a second day on $200 million of University of Connecticut general obligation bonds. The credit is rated Aa2 by Moody’s, AA by Standard & Poor’s and AA-minus by Fitch. Pricing information was not available.
The University of Connecticut deal “should see decent reception as endowments can sometimes insulate universities from municipal economic woes,” Vonella wrote.
On Friday, Loop Capital priced the deal for retail. Yields ranged from 0.2% with a 1.5% coupon in 2012 to 3.33% with 3.75% and 5% coupons in a 2026 split maturity. Portions of credits maturing in 2012 and credits maturing in 2031 were not formally re-offered.
In the competitive market, RBC won the bid for $22.9 million revenue bonds from the Florida Board of Governors. The credit is rated Aa3 by Moody’s and AA-minus by Standard & Poor’s.
