An unexpected amount of requests for bids filled traders screens Friday on a day when the municipal market strengthened in spots beyond the front end of the yield curve.
"The long end was up maybe a basis point or two; maybe 2020 on out it felt a little better," a trader in New York said. "The short end was kind of quiet."
By midday, though, traders noticed decent trading in last week's new issues in the secondary market. "There was a fair amount of bid-wanteds today that was probably being put out for purchases made from this week's calendar," the trader said. "For a Friday, that was surprising."
Transactions in utility debt securitization tax-exempt bond issue credits for the Long Island Power Authority, a $1.6 billion-issue Goldman, Sachs & Co. brought to market Wednesday, were robust, a trader in San Francisco said. "The new-issue stuff is rallying pretty good," he said. "The replacement for LIPA deal is up 14-to-15 basis points."
Falling on the heels of the past week's large calendar, estimates for the coming week's volume point to a lighter offering of new issues. Potential muni bond volume on the week should total $2.59 billion, from sales of about $10.63 billion last week, per Ipreo, The Bond Buyer and Thomson Reuters.
The week's numbers included $2.26 billion of Foothill/Eastern Transportation Corridor Agency, Calif. toll revenue bonds that Barclays priced late Thursday afternoon.
A trader in San Francisco said short credits on the deal were oversubscribed. But yields had to be cheapened by up to five basis points to clear the longer credits.
Several issues on the negotiated calendar top $100 million, led by Guggenheim Securities, which expects to price $283 million of Pennsylvania Economic Development Financing Authority parking revenue bonds. A retail order period will be held Monday, followed by pricing on Tuesday. In the competitive market, Massachusetts is expected to auction $525 million of general obligation bonds, also on Tuesday.
A weekly snapshot of secondary market activity provided by Interactive Data showed that trading this past week continued to make for an active December. Two days this week boasted trade counts above 50,000, something not seen since early September.
Yields on the Municipal Market Data triple-A scale Friday held fast through 6 years on the curve. They were up to two basis points lower for maturities beyond 2019.
The benchmark triple-A 10-year yield slipped a basis point to 2.71%. The 30-year fell two basis points to 4.14%. The two-year yield held at 0.33% for a 21st straight session.
Yields on the Municipal Market Advisors benchmark triple-A scale improved beyond five years on the curve. The 10-year and the two-year held at 2.75% and 0.36%, respectively. The 30-year yield slipped one basis point to 4.39%.
Treasury yields mostly fell Friday. The benchmark 10-year yield dipped one basis point to 2.87%, while the 30-year yield has dropped three basis points to 3.87%. The two-year yield has held at 0.33%.