NEW YORK – Munis continued to rally Monday afternoon with yields falling up to nine basis points in the belly of the curve.
“It feels like there is a little more solid footing,” said a trader in Chicago. “The scale has been bumped pretty aggressively but we haven’t seen the follow through down to the retail sized trades.”
“Adjusted time inventory is the mentality,” the trader said, adding that it is a Monday, with a reasonable sized calendar this week. “So if there is a customer that comes in to buy, people are more inclined to. It’s a different tone from last week. It feels more positive.”
By early afternoon Monday, muni yields continued to fall across the curve, according to the Municipal Market Data scale. On the short-end, yields fell as much as two basis points, while the long end saw yields fall as much as six basis points. The belly of the curve had the most change, with yields plummeting up to nine basis points.
Yields on credits maturing within the five-year range fell as much as three basis points. Yields on bonds maturing in 2017 and 2018 fell as much as to four and seven basis points, respectively. Yields on 2019 and 2020 credits fell between seven and nine basis points. Yields on credits maturing in the 10-year range fell between six and eight basis points, while yields on 20-year bonds fell between three and five basis points.
On Friday, muni yields closed unchanged from Thursday. The benchmark 10-year muni yield closed Friday at 2.46%. The two-year muni remained at 0.46% and the 30-year held its ground at 3.80%.
In Monday afternoon trading, the Treasury rally was going strong, continuing its streak from last Friday. Yields fell between three and 13 basis points throughout the curve. The two-year yield fell three basis points to 0.27%, while the 10-year yield fell 11 basis points to 2.21%. The 30-year yield fell 13 basis points to 3.24%.
JPMorgan held a second day of retail of $715 million Connecticut general obligation bonds. The bonds are rated Aa2 by Moody’s Investors Service and AA by Standard & Poor’s and Fitch Ratings.
In retail pricing, yields on the first series, $550 million of tax-exempt GO bonds, ranged from 0.46% with a 2% coupon in 2013 to 3.72% with a 3.625% coupon in 2030. Credits maturing in 2012 were offered via sealed bid. Bonds maturing between 2023 and 2028 and those with maturities in 2031 were not offered for retail investors. The bonds are callable at par in 2021.
The second series, $165 million of GO refunding bonds, were not available for retail.
Bank of America Merrill Lynch priced for retail $275 million Delaware GO bonds. The bonds were rated triple-A by the major credit rating agencies.
Yields ranged from 0.44% with a 2% coupon in 2013 to 3.46% with a 3.5% coupon in 2031. Bonds maturing in 2012 were offered via sealed bid. Credits maturing between 2023 and 2025, and those maturing in 2027 and 2030 were not offered for retail. The bonds are callable at par in 2020.
