Top-quality municipal bonds ended stronger on Tuesday, according to traders, as yields on some maturities fell by as much as five basis points. Primary market action was basically non-existent as traders and issuers returned to work after the long holiday weekend.
The yield on 10-year benchmark muni general obligation fell four basis points to 1.30% from 1.34% on Friday, while the 30-year muni yield dropped five basis points to 1.94% from 1.99%, according to the final read of Municipal Market Data's triple-A scale.
Treasuries were stronger on Tuesday with investors looking to the U.S. as negative yielding debt grew around the globe. The yield on the two-year Treasury fell to 0.56% from 0.60% on Friday, while the 10-year Treasury yield declined to 1.33% from 1.46% and the yield on the 30-year Treasury bond decreased to 2.14% from 2.25%.
The 10-year muni to Treasury ratio was calculated at 95.2% on Tuesday compared to 91.0% on Friday, while the 30-year muni to Treasury ratio stood at 90.8% versus 88.8%, according to MMD.
Primary Market
Action was very quiet on Tuesday, with no sizeable deals coming to market.
"With everyone having yesterday off, today is like a Monday and typically there is not much going on in the primary on Mondays," said a New York trader.
The majority of the week's issuance will be coming out on Thursday, but there is one notable deal scheduled to hit the market on Wednesday.
RBC Capital Markets is expected to price Chester County, Pa.'s, $97 million of general obligation bonds on Wednesday.
The deal is rated triple-A by Moody's Investors Service, S&P Global Ratings and Fitch Ratings.
"It's great if you are an issuer right now, so I wouldn't be surprised if we saw some decent sized deals come to market that were not on the calendar," said the trader.
There is a $216.180 million competitive offering from the Florida Board of Education for public education capital outlay refunding bonds, listed on the day-to-day calendar on TM3. The deal is rated Aa1 by Moody's and triple-A by Fitch.
Prior Week's Actively Traded Issues
Revenue bonds comprised 51.89% of new issuance in the week ended July 1, down from 52.17% in the previous week,
Some of the most actively traded issues in the week by type were from Puerto Rico, New York and Massachusetts. In the GO bond sector, the Puerto Rico Commonwealth 8s of 2035 were traded 45 times. In the revenue bond sector, the N.Y. MTA 4s of 2036 were traded 82 times. And in the taxable bond sector, the Massachusetts 3.277s of 2046 were traded 80 times.
Previous Week's Top Underwriters
The top negotiated and competitive underwriters of last week included Bank of America Merrill Lynch, JP Morgan, Barclays, Raymond James and Citigroup, according to Thomson Reuters data. In the week of June 26-July 2, BAML underwrote $2.24 billion, JP Morgan $1.24 billion, Barclays $963 million, Raymond James $592 million and Citi $540 million.
