NEW YORK — The municipal market has been slow out of the gates on the day.
The primary market’s initial deals for the week have seen moderate interest so far, a trader in New Jersey said. The secondary, also, has yet to recover from the modest activity it saw last week in the face of the large new issuance that captivated the market’s attention.
“You’re in a low interest rate environment right now,” he said. “There’s not a lot to work with out there. People aren’t as interested in municipals, at least at the retail level. There’s not a lot of return being offered to these people.”
Muni yields were steady across roughly the front half of the curve, according to the Municipal Market Data scale. Bonds maturing after 2033 were flat to one basis point higher.
The benchmark 10-year tax-exempt yield remained unchanged Friday at 2.68% after falling in previous trading sessions. The two-year yield once again held at its low for the year, 0.40%, for a ninth straight session. The 30-year yield fell one basis point on the day to 4.34%.
Treasury yields started off the week higher across the curve, but have recovered somewhat heading into the afternoon. The 10-year yield rose two basis points to 2.99%. It had crossed the 3.00% barrier in the morning, only to fall back.
The 30-year yield rose four basis points to 4.30%. The two-year yield held steady at 0.40%.
This week’s volume estimate shows a decrease in new issuance. About $4.1 billion in new deals is expected, after $8.3 billion came to market last week, the largest volume for new debt offerings in 2011.
In the negotiated market, M&T Securities, Inc., priced for retail $100 million of Maryland general obligation bonds state and local facilities loan of 2011. The bonds were rated triple-A by the major rating agencies.
Yields range from 0.63% with coupons of 2.00%, 3.00%, and 4.00% in a split maturity in 2014 to 3.30% with coupons of 3.25% and 4.00% in a split maturity in 2025.
The Maryland issues this week — which will also include Wednesday’s expected $600 million of GO bonds in four separate pricings — have investors’ attention. They want to know how the issues will price, given the fact that last week Moody’s Investors Service placed Maryland and four other triple-A rated states on review for a possible downgrade.
In response, Treasurer Nancy Kopp decided to compress the retail part of a negotiated deal that had been slated to take place on Friday and today and do it all today, to give Washington time to make progress on a solution to reaching the debt ceiling, as well as give the state time to digest the Moody’s move and gauge its impact.
“The Moody’s action is not going to affect people’s interest in that deal,” the trader said. “It’s still high grade.”
