As the week drew to a close which saw the first public offerings of Build America Bonds, municipals maintained their firmness Friday.
Traders reported yields declined by about four or five basis points in light to moderate activity.
"It's fairly quiet out there, but bonds are definitely up again," a trader in New York said. "We rallied a bit late in the day yesterday, and I think we're just picking up where we left off now. I'd say we're a good four or five basis points better, maybe even a touch more in spots."
Yields fell last week due to increased retail demand, and interest in the new Build America Bonds, of which two issues, from the University of Minnesota and the University of Virginia, came to market. However, this week, several large offerings of BABs are expected to come to market.
The New Jersey Turnpike Authority has a sale slated for today that Thursday was increased to $1.75 billion from $650 million and the BAB piece is expected to be $1.25 billion, up from the initial plan of $250 million. And California has a planned $4 billion taxable GO sale that will include billions of dollars of BABs, slated to come to market early this week.
Trades reported by the Municipal Securities Rulemaking Board showed gains Friday. A dealer bought from a customer New York City Transitional Finance Authority 5s of 2023 at 4.20%, down three basis points from where they traded Thursday. A dealer sold to a customer California 5s of 2032 at 5.52%, four basis points lower than where they were sold Thursday. Bonds from an interdealer trade of District of Columbia 4.75s of 2036 at 5.43%, three basis points lower than where they traded Thursday. Bonds from an interdealer trade of taxable Illinois 5.1s of 2033 yielded 6.22%, three basis points lower than where they traded Thursday.
Meantime, the Treasury market showed some losses Friday. The yield on the benchmark 10-year note, which opened at 2.83%, finished at 2.95%. The yield on the two-year note was quoted near the end of the session at 0.98% after opening at 0.90%. The yield on the 30-year bond, which opened at 3.71%, was quoted near the end of the session at 3.80%.
As of Thursday's close, the triple-A muni scale in 10 years was at 104.6% of comparable Treasuries, according to Municipal Market Data. Additionally, 30-year munis were 123.1% of comparable Treasuries. Also, as of the close Thursday, 30-year tax-exempt AAA-rated general obligation bonds were at 136.7% of the comparable London Interbank Offered Rate.
Activity in the new-issue market was light Friday.
In economic data released Friday, the preliminary April University of Michigan consumer sentiment index came in at 61.9, after a 57.3 final March reading. Economists polled by Thomson Reuters had predicted a 58.5 reading.
