NEW YORK – Munis were mixed Wednesday afternoon as traders noted yields on the short-end were lower, but the large influx of deals pushed muni yields higher on the long-end. Munis were helped by weakening Treasuries.
“It really depends on where you are on the yield curve,” a trader in New Mexico said. “On the short end, we are flat to stronger and on the long-end we are weaker.”
The trader said he is sitting on the sidelines for the day and there is less cash to put to work as the Feb. 1 coupon payment is smaller than other months. “Feb. 1 is not as big as January and July. And the second largest are December and June. So February is small compared.”
Munis were steady to slightly weaker on the long end, according to the Municipal Market Data scale. Yields inside 22 years were steady, while yields outside the 23-year maturity rose up to two basis points.
On Tuesday, the 30-year yield closed at 3.14%, beating the previous record low of 3.15% set Jan. 18. The 10-year muni closed down two basis points to 1.68%, one basis point higher than its low of 1.67% set Jan. 18. The two-year was steady at 0.33%, its lowest since Sept. 27th.
Treasuries continued to weaken. The benchmark 10-year yield rose five basis points to 1.85% while the 30-year yield jumped seven basis points to 3.01%. The two-year was steady at 0.23%.
In the primary market, Barclays Capital held preliminary pricing for $195 million of Board of Regents of the University of Texas System revenue financing system refunding bonds, rated triple-A by the three major rating agencies.
Yields ranged from 0.24% with a 3% coupon in 2013 to 0.35% with a 5% coupon in 2027. The bonds are callable at par in 2022 except for credits maturing in 2022 and 2023.
Bank of America Merrill Lynch priced for retail $150.7 million of Massachusetts State College Building Authority refunding revenue bonds, Rated Aa2 by Moody’s Investors Service and AA by Standard & Poor’s.
Yields ranged from 1.18% with a 4% coupon in 2018 to 4% at par in 2043. Portions of bonds maturing in 2023, 2024, 2026, 2027, 2029, 2030, 2037, and 2043 were not offered for retail. The debt is callable at par in 2022.
JPMorgan priced for retail $150.4 million of California Department of Veterans Affairs home purchase revenue bonds, rated Aa3 by Moody’s, AA by Standard & Poor’s, and AA-minus by Fitch Ratings.
Yields ranged from 2.25% at par in 2018 to 3.875% at par in 2028. Portions of debt maturing in 2028 were not offered for retail. The bonds are callable at par in 2021.
On the competitive calendar, Bank of America Merrill Lynch won the bid for $121.3 million of Virginia Transportation Board revenue bonds, rated Aa1 by Moody’s and AA-plus by Standard & Poor’s and Fitch.
Yields on the first series of $84.6 million, ranged from 0.33% with a 5% coupon in 2014 to 2.45% with a 2.50% coupon in 2026. Credits maturing in 2013, 2015 to 2019, and 2027 were sold but not available. The bonds are callable at par in 2022.
Yields on the second series of $36.7 million ranged from 0.20% with a 3% coupon in 2013 to 1.05% with a 2% coupon in 2018. Bonds maturing in 2015 were sold but not available.
In the secondary market, trades reported by the Municipal Securities Rulemaking Board were mixed.
Some trades showed strengthening. Bonds from an interdealer trader of San Diego Public Facilities Financing Authority 5.25s of 2039 yielded 3.30%, five basis points lower than where they traded Tuesday. A dealer sold to a customer New Jersey Turnpike Authority 7.102s of 2041 at 4.49%, two basis points lower than where they traded Tuesday.
But other trades showed weakening. Bonds from an interdealer trade of New York City Municipal Water Finance Authority 5s of 2045 yielded 3.73%, six basis points higher than where they traded Tuesday. Bonds from an interdealer trade of Jefferson County, Colo., School District 5.64s of 2026 yielded 3.21%, three basis points higher than where they traded Tuesday.
