Market Post: Slow Start to a Promising Week

Monday morning got off to a slow start for municipals both in the secondary and primary as traders waited for some of the headline deals to price later in the week.

The week's primary calendar is scheduled to be the largest in three months, with $6.02 billion slated to price, according to data collected by Ipreo and The Bond Buyer. This week's volume is up nearly 75% from last week's revised sleepy calendar of $3.46 billion. Until the larger deals open their order period, traders will be staying out of the secondary.

"The secondary activity you see now all follows primary activity - so if there's no primary, there's no secondary," said a trader based in New York. After months of inflows, municipal funds are largely saturated. To make room, traders need to sell positions in order to buy new ones, which accounts for most of the secondary market activity in recent months, the New York trader said.

A $481 million San Francisco Airport Commission sale, the week's largest deal, will probably kick off that activity on Tuesday when it scheduled from pricing by JPMorgan Securities LLC.

The structure includes serial bonds maturing from 2029 to 2034 and a 2044 term bond in the larger series, with an additional series each containing of a single 2044 term bond. All are rated A1 by Moody's Investors Service, and A-plus by Standard & Poor's and Fitch Ratings.

The Municipal Market Data's triple-A 5% scale opened steady across the curve on Monday, according to data provided by TM3.

Treasuries strengthened over the weekend after a panic on Friday following the presidential address regarding the country's intended response to Islamic extremists in the Middle East. The two-year strengthened four basis points to 0.54% from Friday's close, while the 10-year tightened three basis points to 2.59%. The 30-year held steady at 3.35%.

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