A solid reception for the week's second largest deal during its retail order period has the market feeling stronger Monday.
California various purpose GO and refunding bond prices for retail were adjusted to two basis points firmer in the belly of the curve from Friday. Traders in California say the deal is finding a decent response from investors.
"Cal seems to be going reasonably well; that helps a lot, sets the tone," a trader in Los Angeles said. "It shows us that there's good demand out there for Cals, making the market feel a little bit better, willing to take on some other bonds."
Also, JPMorgan moved up to Monday pricing on $281.7 million of the New York State Municipal Bond Bank Agency special school purpose revenue bonds to refund outstanding New York City school debt. The pricing had been scheduled for Tuesday.
Traders have mentioned how they're trying to pace their business around the Jewish holiday of Yom Kippur, which envelopes Wednesday's session. Issuers and underwriters have staggered deals to arrive on Tuesday and Thursday.
"People are pushing into the first couple of days of the week," the L.A. trader said. "We'll get some business done today and tomorrow."
The primary anticipates another reasonably solid week of volume. The market can expect $7.70 billion to be issued this week. That compares with last week's revised $7.36 billion.
In the largest deal of the day, RBC Capital Markets continued its retail order period for a second day for $1.55 billion of California various purpose GO and refunding bonds. They are rated A1 by Moody's Investors Service and A-minus by Standard & Poor's and Fitch Ratings.
Yields on the first series, $1 billion of various purpose GOs, ranged from 0.59% with 2% and 3% coupons in a split 2014 maturity to 3.75% with a 5% coupon in 2042. Bonds maturing in 2013 were offered via sealed bid. Portions of credits maturing in 2036 and 2042 were not offered for retail. The bonds are callable at par in 2022.
Yields on the second series, $550.3 million of various purpose GO refunding bonds, ranged from 0.59% with a 4% coupon in 2014 to 2.84% with a 5% coupon in 2030. Credits maturing in 2013 were offered via sealed bid.
RBC is taking no more orders for debt maturing in 2027. Bonds maturing between 2025 and 2030 are callable at par in 2018.
Yields on both series in Monday's offering were lowered by two basis points at the 10-year mark to 2.49%. Institutions should have their opportunity to participate in the deal later on Monday, said Tom Dresslar, spokesman for State Treasurer Bill Lockyer.
"When we distributed the wire, we noticed our intent to accelerate the deal by closing down the retail order period early, and taking institutional orders and setting final prices today instead of Tuesday," Dresslar said in a statement. "No final decision has been made."
On Friday the 30-year Municipal Market Data yield ended the week flat at 2.95%. The 10-year fell two basis points to 1.79% while the two-year closed at 0.29% for the 41st consecutive session.
Treasuries by early Monday afternoon continued to strengthen from the belly of the curve on out. The benchmark 10-year has shed four basis points to 1.72%. The 30-year has dropped six basis points to 2.90%. The two-year is holding at 0.27%.