Market Midday Post: New Issue Well-Received in Firmer Market

New York City general obligation bonds priced for institutions on Tuesday were received by the municipal market, which continued to firm from Monday.

“Things are a little better as there’s a big new issue calendar this week and those deals are going really well,” a trader in the west coast said in an interview. “The New York City general obligations are doing well.”

Jefferies LLC held a second day retail order period for $700 million of New York GO bonds Monday in which yields widened from the initial offering price. Institutional pricing today indicated many of the maturities in the first series were no longer accepting orders.

Yields on the available GOs ranged 0.66% with a 5% coupon maturing in 2016 to 4.35% with a 4.25% coupon maturing in 2031. Yields on bonds in the second series, all of which were still accepting orders, ranged from 0.66% with a 5% coupon in 2016 to 3.59% with a 5% coupon in 2025. Bonds in both series are callable at par in 2024.

The trader said two deals slated for this week, $1.7 billion of California toll road bonds and $1.6 billion of utility debt securitization authority bonds, were shaping up well. Total volume for the week is expected to reach $11.33 billion, up from $6.23 billion last week, Ipreo, The Bond Buyer and Thomson Reuters numbers show.

Traders agreed that falling treasuries were probably a main driving factor of muni yields dropping across the curve.

“Munis love it when there’s green on the screen in treasuries,” a trader said. “There are not a lot of folks long in inventory so I think we’re largely following treasuries.”

Yields on the Municipal Market Data triple-A scale Tuesday slid as much as three basis points on bonds maturing between 2023 and 2043. Yields on bonds maturing five to nine  years out slid up to two basis points, and those with maturities in 2017 slid a basis points. The shorter end of the curve was steady.

Treasuries continued firming, with the benchmark 10-year yield down five basis points to 2.80%, the 30-year down one basis point to 3.86% and the two-year yield unchanged at 0.30%.

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