NEW YORK – Ahead of January reinvestment money, dealers are hoarding short-term bonds and waiting to sell them after Jan. 1 when demand spikes.
A trader in New York said he is seeing a lot of buyers in the 2016 range. “Dealers will sometimes play that card,” he said. “They will go in ahead of the money. Load up on it. And then stock it away and not offer it until January and then mark it up and sell it to customers.”
Munis were flat to firmer, according to the Municipal Market Data scale. Yields inside the three-year were steady while the four-year yield fell two basis points. The five-year yield fell between one and three basis points. The six-year to 15-year yield fell one basis point and yields outside the 26-year fell two basis points.
On Wednesday, the 10-year muni yield fell four basis points to 1.87% to set a new record low as recorded by MMD. The 10-year broke the previous record of 1.91% set the week before Christmas. The two-year yield closed flat at 0.36% for its 15th consecutive trading session. The 30-year yield finished at 3.58%.
Treasuries were mostly flat, with the 10-year a little firmer. The two-year and 30-year were steady at 0.28% and 2.92%, respectively. The benchmark 10-year yield fell one basis point to 1.92%.
Bank of America Merrill Lynch won the bid for $299.5 million of Municipal Electric Authority of Georgia revenue bonds.
The first series consists of $100.73 million of taxable power revenue bonds, rated A-plus by Standard & Poor’s and Fitch Ratings. Yields ranged from a 1.58% coupon priced at par in 2013 to a 4.98% coupon priced at par in 2028.
The second series consists of $57.98 million of taxable general power revenue bonds, rated A-plus by Standard & Poor’s and Fitch. Yields ranged from a 1.58% coupon in 2013 to a 4.98% coupon in 2028.
The third series consists of $59.53 of taxable project one subordinated bonds, rated A by Standard & Poor’s and A-plus by Fitch. The bonds were priced at par to yield 4.03% in 2020 and 4.43% in 2022.
The fourth series consists of $81.24 million of general resolution projects subordinated bonds, rated A by Standard & Poor’s and A-plus by Fitch. Yields ranged from a 3.52% coupon priced at par in 2018 to a 4.43% coupon priced at par in 2022.
In the secondary market, trades reported by the Municipal Securities Rulemaking Board showed firming.
A dealer sold to a customer Commonwealth of Puerto Rico 5s of 2023 at 5.03%, 11 basis points lower than where they traded last week.
A dealer bought from a customer New York City Municipal Water Finance Authority 5s of 2034 at 3.85%, 11 basis points lower than where they traded the prior week.
Another dealer sold to a customer Hudson Yards Infrastructure Corp. 5.25s of 2047 at 4.80%, eight basis points lower than where they traded the previous week.
Bonds from an interdealer trade of Washoe County, Nev., 5s of 2024 yielded 3.41%, six basis points lower than where they traded Wednesday.
