Yields Decline a Bit as Firmness Creeps In

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Most of The Bond Buyer’s weekly yield indexes declined slightly this week, as some firmness continued to permeate a mostly unchanged municipal market.

“Right now, we’re seeing a firmer market, and deals are getting done,” said Howard Mackey, president of the broker-dealer division of Rice Financial Products. “I think the market is firm because there’s still a lot of demand for paper. We see it in the secondary. The real problem is finding bonds right now, so I think the new-issue market can get done at very good spreads at this point.”

Leading the new-issue market this week, JPMorgan yesterday priced $2.5 billion of general obligation bonds for California, upsized from an originally planned $2 billion.

Also this week, Goldman, Sachs & Co. priced $709.3 million of debt for the District of Columbia, and Morgan Stanley priced $650.1 million for Missouri-based Ascension Health through five conduit issuers.

Against that backdrop, The Bond Buyer 20-bond index of 20-year GO yields declined one basis point this week to 4.33%. This is the lowest the index has been since Jan. 21, when it was 4.30%. 

The 11-bond index of higher-grade 20-year GO yields was unchanged this week at 4.06%. It remains at its lowest level since Feb. 11, when it was also 4.06%.

The revenue bond index, which measures 30-year revenue bond yields, dropped one basis point this week to 4.92%, which is the lowest the index has been since Jan. 21, when it was 4.91%.

The Bond Buyer one-year note index, which is based on one-year tax-exempt note yields, declined one basis point this week to an all-time low of 0.39%. The previous record low for the index, which began on July 12, 1989, was 0.40% last week.

The yield on the 10-year Treasury note increased 12 basis points this week to 3.73%, which is the highest the yield has been since Feb. 18, when it was 3.80%.

The yield on the 30-year Treasury bond gained 11 basis points this week to 4.67%, which is its highest level since Feb. 18, when it was 4.74%.

The weekly average yield to maturity on The Bond Buyer’s 40-bond municipal bond index, which is based on 40 long-term municipal bond prices, finished at 5.28%, down two basis points from last week’s 5.30%.

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