NEW YORK – It seems like they can’t be stopped.
Munis are firming in Tuesday morning trading, continuing a trend that has been going on for weeks. Market consensus says munis can handle the week’s new issuance – the bulk of which is expected Tuesday and Wednesday – and if that remains true, munis will continue to climb.
“There is strength in munis,” said a trader in New York.
Munis were steady to firmer in morning trading, according to the Municipal Market Data scale. Yields on the three-year and four-year fell two basis points while the five-year yield fell one basis point. Yields between the six-year and the 13-year were steady or one basis point firmer. Outside the 14-year, yields fell between one and three basis points.
On Monday, the two-year yield fell two basis points to 0.40%. The 10-year yield closed down two basis points to 1.83%, tying the record low as recorded by MMD set Dec. 30. The 30-year fell five basis points to 3.45%, only one basis point above the record low of 3.44% as recorded by MMD on Sept. 23.
Treasuries were weakening on the long end. The benchmark 10-year yield rose two basis points to 1.98% and the 30-year yield increased 3 basis points to 3.05%. The two-year remained steady at 0.26%.
In the primary market, Citi is expected to price $100 million of Pennsylvania Economic Development Finance Authority revenue bonds. The credit is rated Aa3 by Moody’s Investors Service and AA-minus by Standard & Poor’s.
Morgan Stanley held a preliminary pricing period for $94.8 million of Trustees of Indiana University consolidated revenue bonds. The credit is rated Aaa by Moody’s and AA-plus by Standard & Poor’s.
In preliminary pricing, yields ranged from 0.54% with a 2% coupon in 2014 to 3.65% with a 5% coupon in 2037. Bonds maturing in 2013 were offered via sealed bid. The bonds are callable at par in 2022.
In the competitive market Tuesday, the Florida Department of Transportation is expected to auction $238.8 million of general obligation bonds. The credit is rated Aa1 by Moody’s and AAA by Standard & Poor’s and Fitch Ratings.
Short-term notes will make up the bulk of bigger deals in the competitive market. Colorado is expected to sell $230 million of short-term notes, rated M1G-1 by Moody’s and SP-1-plus by Standard & Poor’s.
Allegheny County, Pa., will issue $175 million of short-term notes, rated SP-1-plus by Standard & Poor’s.
