The municipal bond market is gearing up for what it expects will be a
In the process, trading thus far has been modest, with mostly smaller retail trades peppering the morning's activity, a trader in New York said. Tax-exempt yields trail those of Treasuries, which are down slightly to start the week.
"Today and tomorrow are probably going to be new-issue focused," he said. "Most of the talk today is about the supply. You've got a rather large $3 billion Grand Parkway transaction. That's going to steal the show. You're probably flat on the day."
An estimated $9.65 billion of new volume should be priced this week, Ipreo LLC and The Bond Buyer report. This represents an increase from a revised $5.38 billion that arrived last week, according to Thomson Reuters. The $2.9 billion Texas transportation deal from the Grand Parkway Transportation Corporation is expected to lead the way.
The week's deals got an early jump as Piper Jaffray on Friday priced for retail $228.5 million of University of Connecticut general obligation bonds. The bonds were rated Aa3 by Moody's Investors Service, AA by Standard & Poor's, and AA-minus by Fitch Ratings.
Yields on the first series of $174.3 million ranged from 0.50% with a 3% coupon in 2015 to 4.33% with a 4.25% coupon in 2033. Bonds maturing in 2014, 2030 and 2032 were not offered for retail. The bonds are callable at par in 2023.
Yields on the second series of $54.2 million ranged from 0.40% with a 3% coupon in 2015 to 3.14% with a 4% coupon in 2024. Bonds maturing in 2014 were not offered for retail. The bonds are callable at par in 2023.
A second retail order period is expected Monday with institutional pricing Tuesday.
Yields started the day steady across the curve.
On Friday, the 10-year and 30-year yields slid one basis point each to 2.66% and 4.00%, respectively. The two-year was steady at 0.45% for the second session, according to the Municipal Market Data scale read.
Yields on the Municipal Market Advisors scale ended as much as three basis points lower Friday. The 10-year and 30-year yields slipped one basis point each to 2.84% and 4.11%, respectively. The two-year was steady at 0.54% for the second session.
Treasuries started the week a shade stronger. The benchmark 10-year and 30-year yields slipped one basis point each to 2.58% and 3.63%, respectively. The two-year yield slid one basis point to 0.34%.
In economic news, the Commerce Department reported Monday that retail sales rose 0.4% to $422.8 billion in June. Sales increased a revised 0.5% in May, originally reported as a 0.6% rise.
June sales disappointed economists polled by Thomson Reuters, who anticipated the figure to increase 0.8%. On a year-over-year unadjusted basis, retail sales have risen 5.7%.
Excluding autos, retail sales mostly stood flat in June after a 0.3% uptick the previous month. Economists had predicted a 0.4% rise in retail sales minus autos.
