NEW YORK – Supply hungry investors should create decent demand for munis this week, but until new issuance hits the market, munis appear to lack direction.
“Not much” is going on in munis, said a trader in New York. “There is a little buying.” He added that while the Municipal Market Data scale is showing stronger munis, there is “nothing firm yet here.”
The MMD scale showed munis firming in Monday morning trading. Yields on the two-year to five-year fell one basis point while yields on the six-year to eight-year were steady. Yields on the nine-year to 12-year fell one basis point, the yield on the 13-year dropped two basis points, and 14-year yield plummeted three basis points. The 15-year to 22-year was strengthening the most on the yield curve, with yields plunging up to five basis points. Outside the 23-year maturity, yields fell up to three basis points.
On Friday, the two-year yield closed flat at 0.42% for its fourth consecutive trading session. The 10-year yield closed down two basis points to 1.85% and the 30-year fell four basis points to 3.50%.
Treasuries were mostly steady in morning trading, with firming on the short-end. The two-year yield and the benchmark 10-year yield fell one basis point each to 0.26% and 1.96%, respectively. The 30-year yield was flat at 3.02%.
In the primary market, municipals can expect almost $4 billion to come to market, up from a revised $384.9 million last week. In the negotiated market, $2.15 billion is expected to be priced, up from a revised $204.3 million. On the competitive calendar, $1.83 billion is expected to be issued, up from last week’s revised $180.5 million.
Monday, PNC Capital Markets is expected to price $171.4 million of Ohio bonds, rated Aa1 by Moody’s Investors Service, and AA-plus by Standard & Poor’s and Fitch Ratings.
The deal includes $80 million of third frontier resource and development general obligation bonds, $12 million of coal development revenue bonds, and almost $79.4 million of common schools GOs.
In the competitive market Monday, Plano, Texas, Independent School District is expected to sell $92.8 million of GOs, rated Aaa by Moody’s and AA by Standard & Poor’s.
