The tax-exempt market looked to the almost $1 billion of Massachusetts general obligation bonds second retail order period Monday amid an overall larger week of issuance.
Bank of America Merrill Lynch held a second retail order period on $957.7 million of Massachusetts bonds following Friday's retail pricing. The bonds are rated Aa1 by Moody's Investors Service and AA-plus by Standard & Poor's and Fitch Ratings.
Bonds on the first series, $400 million of general obligation bonds, yielded 4% priced at par in 2043. Portions of bonds maturing between 2039 and 2043 were not offered for retail. The bonds are callable at par in 2021. Yields were raised five basis points on the 2043 maturity from Friday's retail pricing.
Bonds on the second series, $100 million of GO green bonds, yielded 3.85% with a 3.75% coupon and 3.67% with a 4% coupon in a split 2033 maturity. Portions of bonds maturing in 2022 were not offered for retail. The bonds are callable at par in 2021. Yields were raised five basis points from Friday's retail.
Yields on the third series, $457.7 million of GO refunding bonds, ranged from 0.64% with 4% and 5% coupons in a split 2016 maturity to 2.39% with 3% and 5% coupons in a split 2023 maturity. Bonds maturing in 2013 were offered via sealed bid. The bonds are callable at par in 2023. Yields were raised between five and eight basis points from the first pricing.
The nearly $1 billion Massachusetts deal comes as overall issuance is up this week. The markets can expect $5.64 billion, up from last week's revised $2.47 billion. In the negotiated market, $4.46 billion is expected to be issued, up from last week's revised $1.64 billion. On the competitive calendar, $1.18 billion should be auctioned, up from last week's revised $826.5 million.
Outside the primary, a secondary trader said the market was quiet. "It's slow again," a New York trader said, adding the market was flat.
Friday, yields on the Municipal Market Data scale ended as much as two basis points higher. The 10-year and 30-year yields rose two basis points each to 2.09% and 3.24%, respectively. The two-year finished flat at 0.29% for the sixth session.
Yields on the Municipal Market Advisors 5% scale also ended as much as two basis points higher. The 10-year and 30-year yields rose two basis points each to 2.14% and 3.34%, respectively. The two-year finished steady at 0.36% for the third session.
Treasuries were stronger Monday morning. The benchmark 10-year yield slid five basis points to 2.11% and the 30-year yield fell three basis points to 3.27%. The two-year yield fell one basis point to 0.30%.
In economic news, the Institute for Supply Management index slipped to 49.0 in May from 50.7 in April, falling below the 50.5 level expected by economists.
"According to the survey data compiled by the ISM, manufacturing activity in May posted a surprising but modest contraction with both orders and production declining," wrote economists at RDQ Economics. "This is the weakest reading on manufacturing growth according to this survey in the recovery. We are not, however, changing our forecast for a 225,000 increase in private payrolls in May and we note that the employment index was little changed in May at 50.1."
