NEW YORK — Municipal yields have started to take to the air as the week’s new issuance is finding buyers for a price. According to a scale read, yields are up across all but the front end, and by as much as four basis points on the long end.
“Deals are struggling a little bit,” a trader in California said. “They’re getting done, but they’re having to do it at pretty attractive levels. And market prices continue to go down.”
But the trader liked Jefferies & Co.’s pricing for $405.7 million Chicago Board of Education unlimited tax general obligation bonds Wednesday.
The secondary is lying low, deep in the shadows of the week’s new deals. Still, he has seen a large sale of California GOs in the 18-to-24-year range.
Tax-exempt yields are starting to follow Treasuries on their ascent to weaker yields, according to the Municipal Market Data scale. They are steady through three years, but are likely to end the day higher after that point.
Muni yields are flat to three basis points higher from four years through 21 years. Beyond that, they are one to four basis points weaker.
The 10-year muni yield rested for a second consecutive session Tuesday. It was steady on the day at 2.55%; it has surged 58 basis points since it sat at a record low on Sept. 23.
The two-year yield also held on the day at 0.43%. The 30-year yield rose two basis points to 3.73%.
Treasury yields started the day with pronounced weakening but have retraced their steps somewhat as the day has progressed. The benchmark 10-year Treasury yield has jumped five basis points to 2.21%. In a little more than a week, it has soared 42 basis points.
The 30-year has increased six basis points to 3.17%. The two-year yield is holding at 0.31%.
The industry anticipates a drop in volume this week. Roughly $6.93 billion is expected, on the heels $8.23 billion last week. The negotiated side has seen many of the week’s largest deals hit.
Leading off, Bank of America Merrill Lynch priced $757.5 million of New York City Transitional Finance Authority future tax secured refunding subordinate bonds fiscal 2003, subseries A-1 future tax secured subordinate bonds fiscal 2012 series B and C. The bonds were rated Aa1 by Moody’s Investors Service and AAA by Standard & Poor’s and Fitch Ratings.
Yields for the first series, $507.6 million of fiscal 2003 subseries A-1 bonds, ranged from 1.38% with a 5.00% coupon in 2015 to 3.59% with a 5.00% coupon in 2025. Yields for the second series, $43 million of fiscal 2012series B bonds, ranged from 0.40% with a 5.00% coupon in 2012 to 3.75% with a 5.00% coupon in 2027.
Those for the third series, $206.9 million of fiscal 2012 series C bonds, ranged from 0.68% with a 5.00% coupon in 2013 to 4.10% with a 4.00% coupon in 2031.
Barclays Capital priced $125 million of Louisiana Public Facilities Authority revenue bonds for the Loyola University project. The bonds were rated A2 by Moody’s and A-plus by Standard & Poor’s.
Yields range from 2.59% with a 5.00% coupon in 2017 to 5.032% with a 5.00% coupon in 2041.
As Treasuries struggle, the equities markets have seen a boost in trading across the major indexes. Each is up by at least 1.51%. The Dow Jones Industrial Average is up 172 points from Tuesday’s close heading into the session’s home stretch.
