The tax-exempt market continued to weaken Wednesday afternoon though the tone of the market felt better than earlier in the week.

Traders said bidding was lighter in the competitive market. Still, the seven-year spot on the curve continued to see sufficient order flow from buyers.

"In terms of order flow, the seven-year range is getting the best business," a Los Angeles trader said. "The long end is also getting business because yields are high and the short-term one-year paper is priced aggressively. But the toughest is the belly of the curve. The 24- to 29-year range is thin."

The general market continued to trade weaker. "There is lighter bidding in the competitive and spreads and cover bids are wider," the trader said. "Dealers are less excited to jump in."

Munis appeared to be searching for a bottom after a big selloff Tuesday. "Tuesday was a dysfunctional day when we lost eight basis points but today feels more in line with the Treasury market. It feels like we are searching for the bottom and maybe we're finding it. On a net basis, today feels better and hopefully we are finding a level."

In the primary market Wednesday, Loop Capital Markets is expected to price for institutions $800 million New York City Transitional Finance Authority future tax secured subordinate bonds. The TFA bonds are rated Aa1 by Moody's Investors Service and triple-A by Standard & Poor's and Fitch Ratings. Pricing was not available by press time.

In the second retail pricing Tuesday, yields ranged from 0.63% with 3% and 4% coupons in a split 2016 maturity to 4.15% with a 4% coupon in 2043. Credits maturing in 2015 were offered in a sealed bid. Bonds maturing in 2030, 2031, 2032, 2038, and 2042 were not offered for retail. The bonds are callable at par in 2023.

Yields were raised as much as 10 basis points from the first retail pricing.

Bank of America Merrill Lynch priced for institutions $549 million Massachusetts School Building Authority senior dedicated sales tax bonds, rated Aa2 by Moody's and AA-plus by Standard & Poor's and Fitch.

Yields ranged from 0.67% with a 4% coupon in 2016 to 4.07% with a 5% coupon in 2043. The bonds are callable at par in 2023. Yields on bonds maturing in 2016 were lowered one basis point from retail pricing Tuesday. Yields on bonds maturing between 2019 and 2038 were raised between five and 12 basis points.

In the competitive market, B of A Merrill won the bid for $232.6 million San Francisco general obligation bonds, rated Aa1 by Moody's and AA by Standard & Poor's and Fitch.

Yields on the first series of $72 million ranged from 0.18% with a 4% in 2014 to 4.25% with a 4% coupon in 2033. The bonds are callable at par in 2021.

Yields on the second series of $31 million ranged from 0.18% with a 4% coupon in 2014 to 4.25% with a 4% coupon in 2033. The bonds are callable at par in 2021.

Yields on the third series of $129.6 million ranged from 0.18% with a 4% coupon in 2014 to 4.25% with a 4% coupon in 2033. The bonds are callable at par in 2021.

On Tuesday, yields on the Municipal Market Data scale ended as much as eight basis points higher. The triple-A 10-year yield rose seven basis points to 2.26% and the 30-year yield jumped eight basis points to 3.49%. The two-year was unchanged at 0.30% for the seventh session.

Muni yields on the Municipal Market Advisors 5% scale closed out as much as eight basis points higher. The 10-year yield climbed five basis points to 2.30% and the 30-year yield jumped six basis points to 3.57%. The two-year ticked up one basis point to 0.38%.

Treasuries were slightly weaker Wednesday afternoon. The benchmark 10-year yield increased one basis point to 2.20% and the 30-year yield rose two basis points to 3.35%. The two-year was steady at 0.33%.

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