Market Post: Decent Demand in Primary as Cyprus Woes Buoy Fixed Income

Eurozone fears continued to dominate global markets Monday afternoon, helping buoy fixed-income assets.

In particular, munis were a few basis points firmer, following Treasuries, and new issues were subsequently well received.

"It's getting a little richer today," a New York trader said. "There is not tremendous demand. Retail is perking their ears up but not buying much." He added the market is one to two basis points stronger.

One of the largest issues of the week priced for retail Monday. Wells Fargo Securities held its first retail order period on $900 million of New York City Transitional Finance Authority tax-exempt, future tax-secured subordinate revenue bonds, rated Aa1 by Moody's Investors Service and AAA by Standard & Poor's and Fitch Ratings. A second retail order period is expected Tuesday with institutional pricing Wednesday. Details were not available by press time.

"There are several New York deals coming to market," this trader said. "And they are a helpful entry point for customers. They are getting decent demand on new issues and priced pretty good. It's helpful to make a slow day busier."

In the rest of the primary market, Barclays priced for retail $422.1 million of State Public Works Board of California lease revenue bonds in a three-pronged deal, rated A2 by Moody's, A by Standard & Poor's, and BBB-plus by Fitch. Institutional pricing is expected Tuesday. Details were not yet available.

This week the municipal bond market can expect $9.51 billion, up from last week's revised $6.08 billion. On the negotiated calendar, $7.77 billion should be priced, up from last week's revised $4.43 billion. On the competitive side, $1.74 billion is expected to be auctioned, up from last week's revised $1.65 billion.

On Friday, yields on municipal bond market scales ended flat to one basis point higher.

The Municipal Market Data triple-A GO scale ended steady. The 10-year and 30-year yields finished flat at 2.00% and 3.14%, respectively. The two-year finished flat at 0.31% for the 19th consecutive session.

Yields on the Municipal Market Advisors 5% coupon triple-A benchmark scale were flat to one basis point higher. The 10-year and 30-year yields closed steady at 2.03% and 3.22%, respectively. The two-year held at 0.33% for the 14th session.

Treasuries continued to firm Monday afternoon. The benchmark 10-year yield and the 30-year yield dropped four basis points each to 1.96% and 3.18%, respectively. The two-year was steady at 0.26%.

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