NEW YORK – The tax-exempt market this week is preparing for the top volume of new issuance any week this year as traders standby Monday morning.
“It’s a slow start today with the focus on new issues,” said a trader in Atlanta. “It’s pretty much unchanged but I’d say it’s a little weaker with the big supply coming.”
A trader in New York added “people are groggy coming out of the long weekend” but activity should pick up as people shake off the cobwebs, he said.
After a three-day weekend, munis were weakening, according to the Municipal Market Data scale. Yields were steady inside the seven-year spot, but rose one basis point on 2019 and 2020 maturities. Muni yields increased up to two basis points in 2021 and beyond.
On Thursday, the two-year muni yield closed at 0.42% for its eighth consecutive trading session. The 10-year muni yield finished at 2.25%, and the 30-year muni yield closed at 3.73%.
Treasuries opened Monday with a small sell-off as fears about Europe subside. The two-year was steady at 0.24%, and the 10-year yield was up two basis points at 2.08%. The 30-year yield rose three basis points to 3.14%.
Making headlines this week is the new issue calendar. The primary market is expected to set a high for this year with nearly $12 billion coming to market. About $9.63 billion of negotiated deals are expected, with more than $2 billion in competitive offerings planned.
Barclays Capital is expected to price for retail Monday $450 million New York City Municipal Water Finance Authority water and sewer revenue bonds. The bonds are rated Aa2 by Moody’s Investors Service and AA-plus by Standard & Poor’s and Fitch Ratings. Institutional pricing is expected to come Tuesday.
Barclays is also expected to price $146.2 million Ohio general obligation refunding bonds Monday. The bonds are rated Aa1 by Moody’s and AA-plus by Standard & Poor’s and Fitch.
