NEW YORK – The tax-exempt market appears to be taking a breather ahead of the biggest day of issuance this week. Munis were mixed in early trading but volume activity remained depressed.
“It’s a bit better today,” said a trader in New York. “But still slower than usual.”
Munis were mixed with the yield curve flattening, according to the Municipal Market Data scale. Inside 11 years, yields rose up to two basis points. Yields were steady between the 12-year and 26-year. Outside 27-years, yields fell one basis point.
On Monday, the 10-year finished up four basis points to 1.87% and the 30-year yield rose three basis points to 3.37%. The two-year closed steady at 0.35% for its seventh consecutive trading session.
Since munis started weakening last Thursday, the 10-year yield has jumped 20 basis points and the 30-year has spiked 22 basis points.
Treasuries were flat Tuesday morning. The two-year yield held steady at 0.25%, the benchmark 10-year opened unchanged at 2.07%, and the 30-year traded flat at 3.15%.
In the primary market Goldman, Sachs & Co. is expected to price $402 million of Florida’s JEA water and sewer system revenue bonds – the biggest deal of the week. The debt is rated Aa2 by Moody’s Investors Service, AA-minus by Standard & Poor’s, and AA by Fitch Ratings.
Ramirez & Co. is expected to price for institutions $400 million of New York City Municipal Water Financing Authority water and sewer system second-general resolution revenue bonds following the retail order period Monday. The bonds are rated Aa2 by Moody’s and AA-plus by Standard & Poor’s and Fitch.
Also on Tuesday, Goldman is expected to price $190 million of University of Chicago taxable fixed rate bonds, rated Aa1 by Moody’s, AA by Standard & Poor’s, and AA-plus by Fitch.
In the competitive market, triple-A rated Wake County, N.C., will auction $176.2 million of general obligation bonds in two pricings: $96.8 million and $79.4 million.