New York issuers dominated the morning trading session on Wednesday, as fund manager continued to clear out their holdings to make room for the newly issued Sales Tax Asset Revenue bond deal that tapped the market on Tuesday.
The Triborough Bridge and Tunnel Authority of New York emerged as one of the morning largest traders, capturing over $90 million in aggregate dollars traded across three tranches as of noon Wednesday, according to data collected by Municipal Securities Rulemaking Board's disclosure website EMMA. The New York City Municipal Water Finance Authority also topped trading lists, with $24 milling traded on a single maturity as of noon, according to EMMA.
Traders expected the secondary market to be flooded with large New York issuers on Tuesday and Wednesday, as fund managers anticipated the issuance of the week's headline deal: the $2 billion New York City STARs deal.
Unlike many of the other New York issuers like the Triborough, New York City Water, even the City's general obligation credit, the issuer behind the STAR bonds is rarely in the market, according to traders. The Sales Tax Asset Receivable Corp., the entity behind the deal, hasn't tapped the market since 2004, making the unique name more valuable to traders trying to achieve diversity within their New York state specific funds, traders said.
Yields halves on three separate Series 2000 Triborough Bridge and Tunnel Authority bond tranches on Wednesday after none had traded since issuance, according to EMMA. The Series 2000 bonds maturing in 2018 saw yields fall from 0.084% to 0.042% in round lot trading, while the bond maturing in 2017 fell from 0.122% to 0.06% in round lot trading, according to EMMA. The Series 2000 bonds maturing in 2019 fell from 0.064% to 0.032%, according to EMMA. Between the three tranches, 40 separate trades were made.
The newly issued New York City Municipal Water Finance Authority Water and Sewer 5s of 2036 was also a top trader on Wednesday after significant activity on Tuesday as well, according to EMMA. Yields softened on the bonds, rising to 3.316% on Wednesday from a low of 3.049% on Tuesday. As of 12:10pm on Wednesday, $45 million had been traded, according to EMMA.
Traders expected the popularity of the New York issuers in the secondary to fizzle out as positions became secured on the STAR deal.
Municipal scales held their strength from Tuesday, and by midday on Wednesday were steady in the front end and tightening further in the intermediate to long end. As of 10:51am, bonds maturing between 2015 through 2027 were unchanged from Tuesday, while yields on bond maturing between 2028 through 2044 had fallen up to one basis point.
The U.S. Treasury curve held mostly steady on Wednesday morning in the intermediate to long end after strengthening on Tuesday. The two-year contracted one basis points to 0.58% compared to Tuesday's market close, while the 10- and 30-year held steady at 2.54% and 3.25% respectively.
