The municipal market erased some gains Tuesday morning as issuers supplied new bonds to the market and tensions in Eastern Europe paused.
In the negotiated market, Citigroup Global Markets held a second day of retail pricing for $650 million of New York City general obligation bonds, the first such issue since the election of Mayor Bill de Blasio. Yields on the bonds tightened from pricing Monday, even as the overall market softened.
The yield on 3%-coupon bonds maturing in 2017 was cut three basis points to 0.56%, while bonds maturing in 2039 were changed from a 4.25% coupon with a 4.3% yield to a 4% coupon with a 4.25% yield.
Yields on short-term bonds in the muni market were steady in the morning, Municipal Market Data reported, while those with maturities beyond 2026 gained one to two basis points.
The rise in yields moved in tandem with Treasury prices, which weakened Monday after Russian President Vladimir Putin said an extended invasion of Ukraine beyond the Crimean peninsula was not imminent.
"Shortly after US trading opened, a number of geopolitical think tanks and research outfits published notes commenting that global powers would work to deescalate the Ukraine tensions," Guy LeBas, chief fixed income strategist at Janney Capital Markets, said in a report Tuesday. "Those notes along with a round of decent domestic economic data helped calm the initial market storm, leaving risk assets to bounce back off of their lows and the safe haven bid for Treasuries to fade slightly."
The 10-year yield rose five basis points to 2.66% from Monday, while the 30-year yield climbed four basis points to 3.60%.
The largest competitive deal of the week, $234 million of Kentucky University receipt bonds is selling in two parts Tuesday. Bank of America Merrill Lynch won the $38.4 million bid of general receipts bonds. Yields ranged from 0.3% with a 5% coupon maturing in 2016 and 3.86% with a 3.75% coupon maturing in 2034. The second Kentucky deal of $195.4 million was apparently won by JPMorgan.
New York is also holding a second issuance of $100 million general obligation bonds through Siebert Branford Shank & Co., scheduled for Tuesday. The bonds are rated Aa2 by Moody's and AA by S&P and Fitch.
