The tax-exempt market ended Tuesday weaker, continuing a sell-off that began Friday after almost three weeks of gains.
“I noticed a few bonds in our inventory did cheapen up about 10 basis points since last week,” a New Jersey trader said. “From what I could see here and there, they are weaker.”
Other traders agreed. “There is a little bit of activity,” a New York trader said. “People are cutting bonds and hitting some bids.”
The competitive calendar took the lead Tuesday. California’s Fontana Unified School District auctioned $299.1 million of general obligation bonds in two pricings — a $78.12 million deal and $220.93 million deal. The bonds are rated Aa3 by Moody’s Investors Service.
Raymond James | Morgan Keegan won the bid for $78.12 million of general obligation refunding bonds. The bonds had coupons ranging from 2% in 2013 to 3.25% in 2031. Yields were not formally re-offered. The bonds are callable at par in 2022.
Citi won the bid for $220.93 of capital appreciation bonds. The zero-coupon bonds had yields ranging from 5.00% in 2030 to 5.75% in 2044.
Bank of America Merrill Lynch won the bid for $120 million of Milwaukee school revenue anticipation notes, rated MIG-1 by Moody’s and SP-1-plus by Standard & Poor’s. The bonds yielded 0.19% with a 1.5% coupon in 2013.
In the secondary market, trades compiled by data provider Markit showed a mix of strengthening and weakening.
Yields on Massachusetts 5.25s of 2023 jumped three basis points to 2.03% while Ohio’s Buckeye Tobacco Settlement Financing Authority 5.75s of 2034 increased one basis point to 7.60%.
Other trades showed strengthening. Yields on Connecticut State Health and Educational Facilities Authority 5s of 2040 and New York 3.25s of 2035 fell three basis points each to 2.05% and 3.32%, respectively. Yields on New Jersey State Transportation Trust Fund Authority 5.5s of 2041 fell two basis points to 3.28%.