Higher-yielding credits in the municipal bond market traded more actively than high-grade bonds after last week's rally left buyers searching for yield in lower-rated credits.
Traders said California and tobacco bonds were the most traded Monday morning. Ohio's Buckeye Tobacco Settlement Financing Authority 5.875s of 2047 were one of the most actively traded, with $24 million in transactions by afternoon, one Chicago trader said. "There are quite a few big trades in interdealer and to customers and a bit firmer too," he said. "Some are better by four basis points. It's the second highest name traded today behind California GOs."
On Monday, a customer sold to a dealer the Buckeye 5.875s of 2047 at 7.80%, down two basis points from where the bonds were sold earlier in the morning.
In the primary market Monday, Morgan Stanley priced for retail $300 million of Colorado Health Facilities Authority revenue bonds on behalf of SCL Health System. The bonds are rated Aa3 by Moody's Investors Service and AA-minus by Standard & Poor's and Fitch Ratings. Institutional pricing is expected Tuesday.
Yields ranged from 4.17% with a 4.125% coupon in 2027 to 5.08% with a 5% coupon in 2044. Bonds maturing in 2026 were priced at par to yield 4% in 2026. The bonds are callable at par in 2024.
The deal comes amid a drop off in supply this week. The market can expect $4.33 billion in deals, down from last week's revised $7.43 billion. The negotiated market can expect $3.45 billion, down from last week's revised $5.06 billion. On the competitive calendar, $877.5 million should be auctioned, down from last week's revised $2.37 billion.
On Friday, yields on the triple-A Municipal Market Data scale ended as much as two basis points stronger. The 10-year and 30-year yields fell one basis point each to 2.49% and 4.07%, respectively. The two-year was steady at 0.35% for the 11th session.
Yields on the Municipal Market Advisors benchmark scale ended as much as one basis point firmer. The 10-year and 30-year yields slid one basis point each to 2.64% and 4.23%, respectively. The two-year yield fell one basis point to 0.53%.
After weakening Monday morning, Treasuries traded flat in the afternoon. The benchmark 10-year and 30-year yields were steady at 2.51% and 3.60%, respectively. The two-year was flat at 0.32%.
