The new issue market got off to an early start Monday as Citi priced for retail $370 million of New York City Municipal Water Finance Authority bonds.
Detroit - reeling from news it could default on up to $2 billion of debt - paper flooded the secondary market without initiating a major selloff.
"There is no panicked selling because no one knows the plan," a New Jersey trader said. "Even in the documents of proposal there is no mention of any kind of percentage of a haircut. Verbally a 90% haircut has been thrown out there but that's more of a wish list."
Detroit water and sewer revenue bonds traded more than general obligation bonds Monday afternoon. One trader even noted a mark-up in price. A dealer sold to a customer $1.5 million of 5.75s of 2027 at 4.02%, only to reoffer the bonds in the secondary market at 3.85%.
In odd-lot trading of Detroit Water Supply System revenue senior lien 5.25s of 2041, bonds on an interdealer trade yielded 5.38% Monday, up 10 basis points from where the bonds traded Thursday.
Bonds in another interdealer trade of Detroit 5s of 2028 yielded 5.44%, up 17 basis points from where the bonds traded Wednesday.
Back in the primary market, Citi priced for retail $368.7 million of New York City Municipal Water Finance Authority water and sewer system second general resolution revenue bonds. Institutional pricing is expected Tuesday. The bonds are rated Aa2 by Moody's Investors Service and AA-plus by Standard & Poor's and Fitch Ratings.
Yields ranged from 3.42% with a 5% coupon in 2028 to 4.40% with a 4.25% coupon and 4.18% with a 5% coupon in a split 2047 maturity. Bonds maturing in 2039 were not offered for retail. The bonds are callable at par in 2023.
Friday, yields on the Municipal Market Data scale ended as much as four basis points lower. The 10-year yield fell four basis points to 2.23% and the 30-year yield slid two basis points to 3.50%. The two-year was steady at 0.31% for the third session.
Muni yields on the Municipal Market Advisors 5% scale closed as much as three basis points lower. The 10-year yield fell three basis points to 2.33% and the 30-year yield slipped two basis points to 3.62%. The two-year yield fell one basis point to 0.38%.
The Treasury yield curve steepened Monday afternoon as yields on the short end fell and yields on the long end rose. The two-year yield slid two basis points to 0.27%. The benchmark 10-year and 30-year yields increased one basis point each to 2.14% and 3.31%, respectively.
