Secondary trading activity slowed Tuesday afternoon as traders said bonds are harder to buy as yields grind lower and turn to cheaper deals in the primary.

In the primary market, a range of high-grade and lower-rated bonds priced, including triple-A Illinois Finance Authority and a split triple-B and double-B Jefferson County, Ala.

"The order flow is slow and money isn't getting placed," a trader located in the Southwest region said. "You can't pay enough to buy in the secondary and if you do, it's a grind to sell it. So it's all new issue right now. October was good to great for order flow and this month isn't. It's just stagnant."

Overall for the day munis had a firmer tone and traders paid higher prices for bonds in the secondary. "The standard deal is if a round lot goes out and doesn't trade, you have to pay higher for it the next day," he said. "It's very difficult to buy bonds and when you do it's a struggle to sell them to retail."

In the primary, the biggest deal of the week priced for institutions on Tuesday. Citi issued a premarketing wire for $1.78 billion of Jefferson County sewer revenue warrants. In the first three series of senior liens bonds, yields were cut five basis points, 13 basis points, and three basis points, respectively, from retail pricing. Yields on the subordinate liens were lowered as much as 25 basis points between 2015 and 2018 but raised 15 and 25 basis points on 2042 and 2053 maturities on the Series 2013 D. Yields were raised as much as 13 basis points in 2050 on the Series 2013 F.

The senior lien bonds are rated BBB by Standard & Poor's and BB-plus by Fitch Ratings. The senior lien series carries insurance from Assured Guaranty Municipal Corp. and ratings of A2 from Moody's Investors Service and AA-minus from Standard & Poor's. The subordinate bonds are rated BBB-minus by Standard & Poor's and BB by Fitch.

Bank of America Merrill Lynch priced $142 million of triple-A Illinois Finance Authority clean water initiative revolving fund revenue bonds. Yields ranged from 0.17% with a 1.5% coupon in 2014 to 2.85% and 2.91% with a 5% coupon in a split 2023 maturity.

Bonds with 5% coupons with January maturities between 2015 and 2023 had spreads ranging from eight basis points richer than Monday's triple-A Municipal Market Data scale to 24 basis points cheaper than the scale. Bonds with 5% coupons with July maturities between 2015 and 2023 yielded five to 30 basis points above the scale.

On Monday, the triple-A Municipal Market Data scale ended as much as two basis points stronger. The 30-year yield slid two basis points to 4.11%. The two-year and 10-year yields closed unchanged for the third session at 0.33% and 2.61%, respectively.

Yields on the Municipal Market Advisors benchmark scale ended as much as three basis points stronger. The 30-year yield slid two basis points to 4.31%. The two-year and 10-year yields fell one basis point each to 0.38% and 2.68%, respectively.

Treasuries continued to weaken Tuesday afternoon. The benchmark 10-year yield rose four basis points to 2.71% and the 30-year yield rose three basis points to 3.79%. The two-year yield increased one basis point to 0.30%.


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