NEW YORK — The last few new deals reaching the primary market are finding an audience. But they are also leaving a quiet secondary market in their wake, a trader in California said.
Muni yields have held steady as the market has ridden the wave of new issuance throughout the week.
Munis reached the early afternoon mixed, though mostly weaker from the eight-year mark on out, according to the Municipal Market Data scale. Maturities in 2014 are flat to one basis point lower. Maturities in 2013, and from 2015 to 2018, are unchanged. And those beyond 2018 are flat to three basis points higher.
The benchmark 10-year tax-exempt yield ended Wednesday flat on the day at 2.66% for the seventh straight day, at 32 basis points below its average for 2011.
The two-year yield also held at 0.40% for a seventh consecutive day, its low for the year. The 30-year yield remained at 4.32% for a fourth straight session, 30 basis points under its average for 2011.
Treasury yields remained weaker across the curve heading into the afternoon. The 10-year yield rose six basis points to 3.00%, a barrier it hasn’t crossed in the eight previous trading sessions dating back to July 8.
The 30-year yield increased six basis points to 4.32%, after rising eight basis points Wednesday. It has fully reversed its 13-basis-point drop late Tuesday afternoon.
The two-year yield inched up one basis point to 0.39%.
This week, new issuance is expected to total $8.27 billion, against a revised $5.71 billion last week. If it comes to pass, it would total the largest volume for new debt offerings this year.
Competitive deals, for both bonds and notes, dominated the primary market on the day. Bank of America Merrill Lynch led the way when they won $613.4 million of San Francisco Public Utilities Commission water revenue bonds. The bonds were rated Aa3 by Moody’s Investors Service and AA-minus by Standard & Poor’s.
Yields range from 2.80% with a 5.00% coupon in 2020 to 4.79% with a 4.50% coupon in 2038. Debt maturing in 2032 though 2034, 2036, 2037, and 2041 was sold, but not available.
“There weren’t a lot of pre-set orders, but the price at which [Bank of America Merrill Lynch] bought it at seemed fair,” the trader said of the San Francisco deal. “It’s starting to trade.”
Bank of America Merrill Lynch also won $200 million of Miami-Dade County tax-anticipation notes. The notes were rated MIG-1 by Moody’s. The yield is 0.12% with a 2.00% coupon in 2012.
Barclays Capital participated in one of the largest new deals so far Thursday on the negotiated side. The bank priced $131.2 million of Colorado River Municipal Water District water system revenue bonds.
The bonds were rated A1 by Moody’s and AA-minus by Standard & Poor’s. Yields range from 0.60% with a 4.00% coupon in 2013 to 4.90% with a 5.00% coupon in 2036.
In the day’s economic news, the U.S. Department of Labor reported the advance figure for seasonally adjusted initial claims was 418,000 for the week ending July 16. This represents an increase of 10,000 from the previous week’s revised figure of 408,000.
The four-week moving average was 421,250. This marks a decrease of 2,750 from the previous week’s revised average of 424,000.
