Prices of top-rated municipal bonds closed out the day weaker, traders said, with some yields five basis points higher on Tuesday.
"The market is much softer," said a New York trader. "We are seeing decent size issuance and for a shortened week; we will have a lot of new issue action."
Primary Market
On Tuesday, New Mexico competitively sold $141.635 million of unlimited tax general obligation capital projects bonds. Morgan Stanley won the GOs with a true interest cost of 1.6893%.
The bonds were priced as 5s to yield from 1.20% in 2020 to 2.05% in 2025. Fiscal Strategies and Public Resources were financial advisors on the sale.
"The deal doesn't look bad, it looks OK," the New York trader said. "There is a big premium, but to me it looks like it was set for institutional and doesn't look like they made it for retail. They are going after the people who will buy it — the institutional group — and it's priced around where it should be."
The bonds, which are non-callable, are rated triple-A by Moody's Investors Service and AA-plus by Standard & Poor's.
The Land of Enchantment State is not often in the market. Since 1995, New Mexico has sold only about $1.675 billion of GOs and has not sold bonds competitively since March 19, 2013. That sale of $137.22 million GOs was won by William Blair with a TIC of 1.8019%. Prior to that, New Mexico last competitively sold $18.645 million of GOs on April 19, 2011, to Robert W. Baird with a TIC of 2.4365%.
Secondary Market
The yield on the 10-year benchmark muni general obligation was up four basis points to 2.09% from 2.05% on Friday, while the yield on 30-year GO was also rose five basis points to 2.92% from 2.87%, according to the final read of Municipal Market Data's triple-A scale.
Treasury prices declined on Tuesday, because of concern over a planned speech by Federal Reserve Chairwoman Janet Yellen next week. Yellen is expected to suggest the Fed still plans to go ahead with raising rates sometime around June.
The two-year Treasury note's yield rose to 0.67% on Tuesday from 0.63% on Friday, while the 10-year yield jumped to 2.14% from 2.02% and the 30-year yield increased to 2.74% from 2.63%.
The 10-year muni to Treasury ratio was calculated at 97.7% on Tuesday versus 101.0% on Friday, while the 30-year muni to Treasury ratio stood at 106.6% compared to 109.1%.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar rose $337.6 million to $9.533 billion on Tuesday. The total is comprised of $2.072 billion competitive sales and $7.461 billion of negotiated deals.
MSRB Reports Previous Session's Activity
The Municipal Securities Rulemaking Board reported 31,418 trades on Friday on volume of $7.935 billion.
Most active on Friday, based on the number of trades, was the Pennsylvania Higher Educational Facilities Authority's 2015 Series A revenue bonds for Thomas Jefferson University 4s of 2045, which traded 322 times at an average price of 99.647, with an average yield of 4.013%.
Last Week's Actively Quoted Issues
New York and Puerto Rico bonds were among the most quoted issues by dealers in the week of Feb. 9, according to data released by Markit.
Among bid side quotes, Port Authority of New York and New Jersey revenue bond 4.458s of 2062 were quoted by 14 unique dealers. Among ask side quotes, New York Metropolitan Transportation Authority revenue bond 5s of 2045 were quoted by 17 dealers. And among two-sided quotes, the Puerto Rico GO 8s of 2035 were quoted by 19 dealers, Markit said.
