New deals have arrived, but the tenor the municipal market has taken on has moved toward one of higher yields.
Treasuries, which started out the morning stronger across the curve, made a sharp about-face crossing noon, reversing the morning's gains in the process. New issues and institutions are pushing muni yields higher, but with little conviction, a trader in Texas said.
"The market feels a little weaker," he said. "The bid side has definitely pulled back a little bit; it's nothing dramatic. With Treasuries fading close to 2.00% at the 10-year and 3.15% at the 30-year, it's definitely got a weaker tone to it, with munis following suit."
Retail investors are mostly sitting on the sidelines, the trader added.
Volume continues to be slight compared to this time last year. This week, $6.45 billion is expected to reach the market, which represents an increase from last week's revised $5.24 billion.
The industry expects to see $5.05 billion in negotiated deals, up from last week's revised $3.27 billion. On the competitive calendar, $1.40 billion should be auctioned, a decline from last week's revised $1.97 billion.
There aren't any deals slated to weigh in at more than $400 million, though. A deal consisting of airport revenue improvement bonds for Dallas-Fort Worth International Airport, at $366.0 million, leads the way.
Some of the week's larger deals arrived Tuesday. Bank of America Merrill Lynch priced $351.2 million of Los Angeles wastewater system subordinate revenue refunding bonds. The bonds are rated Aa3 by Moody's Investors Service and AA by Standard & Poor's and Fitch Ratings.
Yields range from 0.20% with a 2.00% coupon in 2014 to 3.15% with a 5.00% coupon in 2035. Credits in 2014 were offered in a sealed bid. The bonds are callable at par in 2023.
In repricing, yields were lowered two basis points at the front end of the curve, five basis points in 2020, and four basis points in 2035.
B of A Merrill priced for retail $311.3 million of San Jose Financing Authority lease revenue refunding bonds for the Civic Center project. The bonds are rated Aa3 by Moody's and AA by Standard & Poor's and Fitch.
Yields range from 0.48% with a 3.00% coupon in 2015 to 3.63% with a 4.00% coupon in 2032. Debt maturing in 2025, 2027, 2029, 2030, 2033 and 2039 were not offered to retail. The bonds are callable at par in 2023.
Wells Fargo Securities priced for retail $126.5 million of Charlotte-Mecklenburg, N.C., Hospital Authority Healthcare System health care revenue bonds. The bonds are rated Aa3 by Moody's and AA-minus by Standard & Poor's.
Yields range from 0.48% with a 3.00% coupon in 2015 to 4.02% with a 4.00% coupon in a split maturity in 2039. Credits in 2033 as well as some in 2039 were not offered to retail. The bonds are callable at par in 2023.
Muni market yields crossed into the afternoon higher in the belly of the curve by up to two basis points, according one market scale. They were steady through six years and beyond 14 years.
On Monday, yields on the Municipal Market Data triple-A GO scale finished one to two basis points higher. The two-year and the 10-year yields held steady at 0.28% and 1.81%, respectively. The 30-year yield ticked up two basis points 2.95%.
Yields on the Municipal Market Advisors 5% scale ended Monday slightly higher. The 10-year and 30-year yields inched up one basis point each to 1.86% and 3.07%, respectively, on Monday. The two-year yield remained unchanged at 0.33%.
Treasury yields started Tuesday stronger across the curve, yet weakened by the early afternoon, reversing their gains. The benchmark 10-year yield has risen one basis point from Monday's close to 1.94%.
The 30-year yield has skipped up two basis points from Monday's close, to 3.15%. The two-year yield has held steady at 0.25%.