Municipal bond yields firmed Monday morning as buyers prepared for the first week of more than $5 billion of potential issuance since January.
The number of new bonds available in February was the lowest for the month since 2000, enabling issuers to price at low yields and causing firming throughout most of the curve. The coming week, with $5.28 billion in estimated volume, presents an opportunity for eager buyers in the municipal marketplace.
"The new deals are going to get eaten up, it's going to be a gobble," one Chicago-based trader said in an interview. "We're absolutely going to remain firm" as the new deals price, he said.
There are $3.90 million of negotiated bonds slated for this week, and $1.37 billion in competitive deals, according to data from Ipreo and The Bond Buyer. Last week's total bond sales came to just $2.49 billion.
"There's just a ton of cash on the sidelines and there's been no supply," the trader said.
The second-biggest deal of the week, $700 million of New York City general obligation bonds led by Citigroup Global Markets, held retail pricing on Monday.
Yields on the GOs ranged from 0.59% with a 3% coupon in 2017 to 4.3% with a 4.25% coupon in 2039. Bonds maturing from 2024 to 2033, as well as those in 2013 and from 2035 to 2038, were not offered for retail.
Municipal bond yields as a whole were down as much as six basis points on the long end Monday morning, according to Municipal Market Data. Yields on bonds maturing from 2020 to 2026 were down as much as four basis points.
Treasuries strengthened Monday morning, with the 10-year benchmark yield down five basis points to 2.62%, while the 30-year fell to 3.56%. The two-year yield slid two basis points to 0.31%.
