The municipal market returned to work on Tuesday as the recent rally in municipal bond prices stalled out a bit. Prices of the highest-rated municipal bond prices were mostly unchanged at mid-session, traders said. Trading resumed after the Martin Luther King, Jr., holiday on Monday.
The market will also be gearing up for a rather hefty slate of new issues squeezed into this holiday-shortened week.
Primary Market
Muni volume is estimated at $7.824 billion, according to Ipreo and The Bond Buyer. Negotiated deals total $5.910 billion while bonds while competitive sales total $1.915 billion.
Some of the big deals slated for the week include the $508 million Alabama Federal Aid Highway Finance Authority's special obligation revenue bonds to be priced by Morgan Stanley on Wednesday and $460 million in competitive offerings from Washington state of various purpose general obligation refunding bonds, going up for bid on Wednesday.
The largest deal of the week will come on Thursday -- a $1.75 billion offering from the Texas Transportation Commission for the Central Texas Turnpike System, consisting of first- and second-tier revenue refunding bonds to be priced by Barclays Capital. Also slated for Thursday are the $460 million Louisiana gas and fuels revenue bonds to be priced by Citigroup Global Markets and the $442 million East Bay Municipal Utility District, Calif., water revenue bonds to be priced by J.P. Morgan Securities.
Secondary Market
Prices of top-quality munis were little changed at midday, according to traders.
The yield on the 10-year benchmark general obligation on Tuesday was unchanged from 1.75% on Friday, while the yield on 30-year GOs was unchanged from 2.54%, according to a read of Municipal Market Data's triple-A benchmark scale.
Treasury prices were higher, with the two-year note yield slipping to 0.46% from 0.47% on Friday. The 10-year yield was down to 1.76% from 1.81%, while the 30-year yield fell to 2.37% from 2.43%.
On Friday, the 10-year muni to Treasury ratio stood at 96.7% compared to 98.9% on Thursday, while the 30-year muni to Treasury ratio was at 104.5% versus 104.7%.
MSRB Reports Previous Session's Activity
The Municipal Securities Rulemaking Board reported 31,732 trades on Friday on volume of $8.098 billion. Most active on Friday, based on the number of trades, was the New York Metropolitan Transportation Authority 2015 Subseries A1 revenue bond 5s due 11/15/2045, which traded 175 times with an average price of 117.135 and an average yield of 3.05%.
