The municipal bond market posted gains for a fifth session Wednesday even as Treasury prices drifted lower as trading in the secondary picked up in volume.
Traders said much of the market was focused on primary deals, allowing them to get better prices and more transactions completed in the secondary.
"It feels a little stronger and we are able to buy cheaper because people aren't paying attention and are focused on the primary," a New Jersey trader said. "There is good order flow today."
Higher yielding bonds on the short end of the curve were active, including insured Atlantic City credits. Moody's Investors Service said Wednesday morning it downgraded the general obligation debt to Baa2 from Baa1.
On the long-end of the curve, territory credits were actively trading, including Puerto Rico, Virgin Islands, and Guam.
In the primary, Wells Fargo priced the $1.5 billion Port Authority of New York and New Jersey bonds, rated Aa3 by Moody's Investors Service and AA-minus by Standard & Poor's and Fitch Ratings.
Yields on the first series of $475.2 million of bonds subject to the alternative minimum tax, ranged from 1.61% with a 5% coupon in 2018 to 5% priced at par in 2038. Bonds maturing between 2015 and 2043 were not offered for retail. The bonds are callable at par in 2023.
Yields on the second series of $913.2 million ranged from 0.42% with a 4% coupon in 2015 to 4.32% with a 4.25% coupon in 2033. Bonds maturing between 2027 and 2043 were not offered for retail. The bonds are callable at par in 2023. Spreads on bonds with 5% coupons ranged from seven basis points in 2016 to 28 basis points in 2026 above Tuesday's double-A Municipal Market Data scale.
Yields on the third series of $111.6 million ranged from 0.32% with a 3% coupon in 2015 to 2.49% with a 4% coupon in 2021.
Wells Fargo priced for retail $380 million of Los Angeles Department of Water and Power system revenue bonds, rated Aa2 by Moody's and AA by Standard & Poor's and Fitch.
Yields ranged from 0.69% with a 5% coupon in 2017 to 4.20% with a 5% coupon in 2035. The bonds are callable at par in 2023. Bonds maturing between 2017 and 2024 were priced four to 20 basis points richer than Tuesday's double-A MMD scale. Bonds maturing between 2025 and 2035 yielded two to nine basis points above the scale.
In the competitive market, Bank of America Merrill Lynch won the bid for $225 million of Maryland Department of Transportation consolidated bonds rated Aa1 by Moody's, AAA by Standard & Poor's, and AA-plus by Fitch.
Yields ranged from 0.50% with a 5% coupon in 2016 to 3.66% with a 3.75% coupon in 2028. The bonds are callable at par in 2021. Bonds with 5% coupons maturing between 2016 and 2021 were priced up to seven basis points cheaper than Tuesday's triple-A MMD scale.
On Tuesday, the triple-A Municipal Market Data scale ended stronger for the fourth consecutive session with yields falling as much as two basis points. The 30-year yield slid two basis points to 4.09%. The two-year and 10-year yields closed unchanged for the fourth session at 0.33% and 2.61%, respectively.
Yields on the Municipal Market Advisors benchmark scale ended as much as two basis points stronger. The 30-year yield slid one basis point to 4.30%. The two-year and 10-year yields were steady for the second session at 0.38% and 2.68%, respectively.
Treasuries reversed morning gains and traded weaker Wednesday afternoon. The benchmark 10-year yield rose four basis points to 2.75% and the 30-year yield climbed six basis points to 3.86%. The two-year was flat at 0.30%.