NEW YORK – Activity is picking up in muniland as traders say munis are stepping out on their own and are no longer following Treasuries.
As yields on Treasuries fall in choppy trading, munis are running their own course. “We have been on land by ourselves,” said a trader in New Jersey. “With the swings of plus or minus two basis points, you do see follow-through, but these up 20 and down 20 ticks in Treasuries are so volatile that the muni world is not following much.”
This trader added that there is activity in the secondary. “People are dabbling a little bit on the bid side. We are flat to up a bit.”
Both retail and institutional buyers are jumping in to the market. “There is more retail with the right structure,” the trader said. “The institutional guys are selling most of the 20- to 25-year durations and the retail is eating it up.”
Tax-exempt yields continued to rise in Tuesday early afternoon trading, according to the Municipal Market Data scale. Yields on credits maturing between 2026 and 2029 increased one basis point, while yields on credits maturing between 2030 and 2031 moved up to two basis points. Beyond 2033, yields jumped up to three basis points. Yields were steady within the 14-year spot.
On Monday, the two-year yield closed at 0.42% for its fifth consecutive trading session. The 10-year closed at 2.29% and the 30-year yield finished at 3.70%.
Treasuries were choppy in early afternoon. Yields rose in the morning as investors felt confident to move away from the safe haven asset. But by early afternoon, investors were worried about Italy and yields fell. After rising two to three basis points in the morning, yields fell to yesterday’s closing levels. The benchmark 10-year yield was back at 2.02% while the 30-year yield was 3.06%. The two-year was one up basis points to 0.25%.
In the primary market, Ramirez & Co. priced for institutions $185 million of Philadelphia water and wastewater revenue bonds in two series. The bonds are rated A1 by Moody’s Investors Service, A by Standard & Poor’s, and A-plus by Fitch Ratings.
Yields on the first series, $135 million of water and wastewater revenue bonds, ranged from 4.56% with 4.5% coupon in 2036 to 4.6% with a 5% coupon in 2041. The bonds are callable at par in 2021.
Yields on the second series, $50 million of revenue bonds, ranged from 1.94% with 4% and 5% coupons in a 2016 split maturity to 3.87% with a 5% coupon in 2026. The bonds are callable at par in 2021.
Bank of America Merrill Lynch won the bid for $159.1 million of Florida State Board of Education public education capital outlay refunding bonds. The bonds are rated Aa1 by Moody’s and AAA by Standard & Poor’s and Fitch.
Yields range from 3.04% with a 4% coupon in 2023 to 4.10% with a 4% coupon in 2030. Credits maturing in 2022, 2024, 2029, 2031, and 2032 were sold but not available. The bonds are callable at par in 2021.
JPMorgan won the bid for $124 million Clark County, Nev., revenue bonds, rated Aa3 by Moody’s and AA-minus by Standard & Poor’s. Details were not available by press time.
