NEW YORK – Munis continue to weaken Tuesday, following Treasuries, as primary issuance isn’t enough to buoy markets. Secondary market activity is light and bonds are trading weaker.

And while bonds are weaker, traders said deals were being well received.

“We’re not far off of the recent all time lows and the issuers are benefiting,” said a trader in Connecticut. “Interesting, with absolute rates so low, investors are stepping out on the credit spectrum so credit spreads are tightening a bit. Luckily, overall supply is moderate so demand is expected to remain strong.”

He added he is participating in a refunding deal Tuesday and “feedback has been great.”

Munis were weaker by Tuesday afternoon, according to the Municipal Market Data scale. The two-year yield rose one basis point while the three- and four-year yields were steady. Yields between the five-year and 16-year jumped up to four basis points. Outside 17 years, yields were steady.

On Monday, the two-year yield closed steady for its fourth consecutive trading session at 0.30%, remaining at its record low set Oct. 10. The 30-year yield was steady at 3.22%. The 10-year yield rose two basis points to 1.79%.

Since the most recent rally began Jan. 24, muni yields fell as much as 22 basis points across the curve up until Friday. The losses Friday and Monday erased gains munis made since Jan. 26.

Treasuries continued to weaken across the curve. The two-year yield rose two basis points to 0.26% while the benchmark 10-year yield soared eight basis points to 1.98%. The 30-year yield jumped seven basis points to 3.16%.

In the primary market, several big deals priced Tuesday.

Goldman, Sachs & Co. priced for institutions $279.2 million of Shelby County, Tenn., general obligation refunding bonds, rated Aa1 by Moody’s Investors Service, and AA-plus by Standard & Poor’s and Fitch Ratings. Pricing details were not available by press time.

In retail pricing Monday, yields on the first series, $264.1 million of GO refunding bonds, ranged from 0.21% with a 2% coupon in 2013 to 2.75% with a 3.5% coupon and 2.62% with a 5% coupon in a split 2028 maturity. The bonds are callable at par in 2022 except for credits maturing in 2023 and 2024.

Yields on the second series, $15.1 million of special GO school refunding bonds, ranged from 0.21% with a 2% coupon in 2013 to 1.38% with a 4% coupon in 2019.

Citi priced $250 million of San Antonio Water System revenue refunding bonds, rated Aa1 by Moody’s, AA-plus by Standard & Poor’s, and AA by Fitch. Details were not available by press time.

Wells Fargo priced $140.7 million of Conroe, Texas, Independent School District unlimited tax school building and refunding bonds. The credit is rated Aa2 by Moody’s and AA by Standard & Poor’s. Details were not yet available.

In the secondary market, trades reported by the Municipal Securities Rulemaking Board showed weakening.

A dealer sold to a customer Bay Area Toll Authority 7.043s of 2050 at 4.94%, nine basis points higher than where they traded Monday.

A dealer bought from a customer New York Liberty Development Corp. 5s of 2041 at 3.90%, eight basis points higher than where they traded last Friday.

Another dealer bought from a customer New York City Municipal Water Finance Authority 5s of 2045 at 3.83%, three basis points higher than where they traded Monday.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.