The municipal bond market ended a few basis points stronger Monday, reversing a two-week losing streak as Eurozone woes pushed fixed income assets higher.
While munis followed Treasuries higher on an overall risk off trade, the market focused on several retail order period pricings.
In the primary markets, retail interest was better than it had been in weeks, traders said.
“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.
Specifically, New York primary deals did well.
“There are several New York deals coming to market,” he 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.”
A secondary trader said bonds were also firmer. “Munis have been down for a while and this is a little snap back,” a second New York trader said. “It’s a bit higher.” He added that California bond yields traded one to two basis points lower on the short end.
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.
Yields on the first series, $650 million of tax-exempt subordinate bonds, ranged from 0.54% with a 4% coupon in 2016 to 3.83% with a 4% coupon in 2039. Bonds maturing in 2015 were offered via sealed bid. Credits maturing between 2025 and 2030 were not offered for retail. The bonds are callable at par in 2023.
Yields on the second series, $72 million of future tax secured tax-exempt subordinate bonds, ranged from 0.44% with a 4% coupon in 2015 to 2.95% with a 5% coupon in 2028. Credits maturing in 2013 and 2014 were offered via sealed bid. The bonds are callable at par in 2023.
Yields on the third series, $178 million of future tax secured tax-exempt subordinate bonds, ranged from 0.44% with a 4% coupon in 2015 to 3.45% with a 3.25% coupon in 2031. Credits maturing in 2014 were offered via sealed bid. The bonds are callable at par in 2023.
Barclays priced for retail $421.6 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.
Yields on the first series, $332.6 million of lease revenue bonds for the Judicial Council of California, ranged from 1.06% with a 3% coupon in 2017 to 4.125% coupon priced at par in 2033. Bonds maturing between 2027 and 2029, in 2031, 2032, and 2038 were not offered for retail. The bonds are callable at par in 2023.
Yields on the second series, $13.6 million of lease revenue bonds for the Department of Corrections and Rehabilitation, ranged from 0.56% with a 2% coupon in 2015 to 3.90% with a 3.75% coupon in 2028. Credits maturing in 2014 were offered via sealed bid. The bonds are callable at par in 2023.
The third series, $75.4 million of lease revenue bonds for the Regents of the University of California, were rated Aa2 by Moody’s, AA-minus by Standard & Poor’s and AA by Fitch.
Yields ranged from 0.81% with a 2% coupon in 2017 to 3.84% with a 3.75% coupon in 2033. Bonds maturing in 2038 were not offered for retail. The bonds are callable at par in 2023.
For the 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.
In the secondary market, trades compiled by data provider Markit showed firming.
Yields on California 5s of 2025 plummeted six basis points to 2.92% while Cedar Hill, Texas, Independent School District 5s of 2043 fell four basis points to 3.23%.
Yields on Pennsylvania Higher Educational Facilities Authority 5s of 2019 and Virginia Public Building Authority 5s of 2024 fell three basis points each to 1.44% and 2.40%, respectively.
Yields on Massachusetts Bay Transportation Authority 5.25s of 2022 and Florida Board of Education 5s of 2024 fell one basis point each to 2.00% and 2.23%, respectively.
Yields on municipal bond market scales ended lower for the first time in several weeks.
Yields on the Municipal Market Data triple-A GO scale ended as much as four basis points lower. The 10-year and 30-year yields fell three basis points each to 1.97% and 3.11%, respectively. The two-year finished flat at 0.31% for the 20th consecutive session.
Yields on the Municipal Market Advisors 5% coupon triple-A benchmark scale ended as much as three basis points lower. The 10-year and 30-year yields fell two basis points each to 2.01% and 3.20%, respectively. The two-year held at 0.33% for the 15th session.
As U.S. and global stocks fell over concerns over Cyprus, Treasuries rallied. The Dow Jones Industrial average closed down over 50 points, or 0.37%, to 14,460. The S&P 500 dropped 8.87 points, or 0.57%, to 1,551. The Nasdaq fell 12.60 points, or 0.39%, to 3,236.
Treasuries ended stronger, but pared most of the morning gains by closing. The benchmark 10-year yield dropped five basis points to 1.95% while the 30-year yield fell three basis points to 3.19%. The two-year yield fell one basis point to 0.25%.
