NEW YORK – The California municipal market was weaker Monday, ignoring a strengthening Treasury market, ahead of more than $10 billion of expected new issuance this week.
Traders said tax-exempt yields were higher by six to eight basis points overall, with 30-year yields climbing to a 16-month high.
“It’s pretty messy out on the Street,” a trader in Los Angeles said. “The really short end is pretty flat, but the long end is looking particularly ugly. Treasuries are up a bit, but we’re going in the complete opposite direction and just doing our own thing.”
The Municipal Market Data triple-A scale yielded 3.09% in 10 years Monday, up eight basis points from Friday’s 3.01%, its highest level since 3.10% on April 13, while the 20-year scale increased eight basis points to 4.33%, its highest since it was also 4.33% on June 19, 2009. The scale for 30-year debt rose eight basis points to 4.69%, the highest since it was also 4.69% on Aug. 4, 2009.
Monday’s triple-A muni scale in 10 years was at 93.9% of comparable Treasuries and 30-year munis were at 106.3%, according to MMD. Meanwhile, 30-year tax-exempt triple-A general obligation bonds were at 113.8% of the comparable London Interbank Offered Rate.
The Treasury market showed some gains Monday. The benchmark 10-year note was quoted recently at 3.29% after opening at 3.32%. The 30-year bond was quoted recently at 4.41%, after opening at 4.43%. The two-year note was quoted recently at 0.61% after opening at 0.64%.
In the competitive market this week, the San Francisco Public Utility Commission is on tap to sell a two-pronged offering of tax-exempt and taxable water revenue debt on Wednesday totaling $523.5 million.
The tax-exempt portion consists of $173.5 million of serial bonds maturing from 2017 to 2030, while the $350 million taxable BAB portion is structured to mature from 2031 to 2050. Both series are rated Aa2 by Moody's and AA-minus by Standard & Poor's.
The economic calendar was light Monday.
Previous Session's Activity
The most actively traded security in the state yesterday was taxable California 5.7s of 2021, which traded 110 times at a high of 100.082 and a low of 97.241.
