Market Close: Munis End Busy Primary Week On Steady Note; PREPA Higher

After a busy week in the primary market, tax-exempts paused Friday as yields ended mostly unchanged.

Amid a quiet secondary market, Puerto Rico Electric Power Authority bonds traded stronger following the Wednesday pricing of $673 million power revenue bonds.

Traders said the bonds looked cheap when the issuer priced in the primary Wednesday and were able to sell them higher in the secondary.

“There is some trading in the secondary higher,” a New York trader said. “But there is not much trading.”

A second trader in New York said odd-lot trades were dominating.

Interactive Data said the long bonds traded higher in block size with yields lower by two basis points to five basis points. Retail investors are buying bonds with yields lower by 30 to 33 basis points than where they priced in the primary.

One CUSIP of PREPA 7s of 2043 traded one to six basis points lower in yield in institutional size blocks and as much as 33 basis points lower in yield to retail investors. Another CUSIP of PREPA 7s of 2040 traded five basis points lower in an institutional trade, Interactive Data said.

Outside PREPA, the market was steady. “There is not much activity,” a New York trader said. “It’s a muni summer Friday and yields are steady.”

Still, trades compiled by data provider Markit showed weakening. Yields on Ohio’s Akron Bath Copley Joint Township Hospital District 5s of 2038 rose four basis points to 5.21% and Boston 5s of 2023 increased two basis points to 2.75%. Yields on Delaware Transportation Authority 5s of 2018 and Georgia 5s of 2030 rose one basis point each to 1.41% and 3.78%, respectively. Yields on Louisiana 4s of 2028 increased one basis point to 4.14%.

Friday, yields on the Municipal Market Data scale ended steady. The 10-year yield closed unchanged at 2.72% for the second session and the 30-year was steady at 4.28% for the fourth session. The two-year finished flat at 0.43% for the 18th consecutive session.

Yields on the Municipal Market Advisors scale were mostly flat to one basis point lower on longer maturing bonds. The two-year yield was unchanged at 0.54% for the third session and the 10-year yield finished steady at 2.90% for the fourth session. The 30-year yield slipped one basis point to 4.33%.

Treasuries were stronger Friday. The benchmark 10-year yield slid one basis point to 2.58% and the 30-year yield dropped three basis points to 3.64%. The two-year was steady at 0.31%.

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