NEW YORK — The week’s new issuance so far appears to have municipal bond yields moving upward Wednesday. Concessions needed to get deals done are forcing wider yield spreads to benchmark scales.
Some of last week’s deals had to be offered at concessions, as well, which indicated that a week of even more supply arriving in a market with such low yields could prove difficult for investors. And as another indicator of what was to come this week, some deals last week were slightly downsized, a trader in New York noted.
“We’ve witnessed a couple of cuts where the bulk of the supply is being offered, despite Treasuries continuing to be pretty strong,” he said. “It’s because of low yields and just uncertainty on direction at this point and for what’s going on overseas.”
The secondary is seeing slightly more than $1 billion traded, thus far on the day, the trader said. This is not an abnormally low amount for this time of the week and year, but the market is focusing far more on the primary at the moment, he added.
Tax-exempt yields started the day weaker, particularly around the 10-year range, according to the Municipal Market Data scale. Through five years they are one to five basis points higher. Beyond five years they are three to seven basis points weaker.
The 10-year muni yield rose five basis points Tuesday to 2.29%. The 30-year yield slipped one basis point to 3.54%.
The two-year yield held steady for a fifth straight session at 0.34%.
Treasury yields are mostly weaker across the curve early Wednesday. The benchmark 10-year Treasury yield has increased two basis points to 1.86%.
The 30-year yield has risen three basis points to 2.84%. The two-year yield has held steady at 0.26%.
In total, $8.26 billion of new issuance is expected this week. Last week, the market saw a revised $7.69 billion in new supply.
Goldman, Sachs & Co. priced $648.7 million of Trinity Health Credit Group in five series. The deal is from five separate issuers, including the Michigan Finance Authority; California Statewide Communities Development Authority; Franklin County, Ohio; Montgomery County, Md.; and the Illinois Finance Authority.
