Municipal bonds rallied for their fourth straight day on Friday.
Yields for bonds maturing in two years and from nine to 12 years dropped by as much as two basis points, according to Municipal Market Data's triple-A scale.
"There's been a rally in the marketplace and, with the continued lack of supply, it's been tougher to find value," Fred Bacani, head of fixed income & trading at Veritable LP in Newtown Square, Pa., said.
So far this month, the two-year had fallen three basis points to 0.35%, the 10-year dropped by four basis points to 2.28%, and the 30-year has declined by seven basis points to 3.54%, according to Municipal Market Advisors' data.
"Munis had a positive session yesterday with particular strength on the long end of the curve," Alan Shankel, managing director at Janney Capital Markets, wrote in a report released on Friday.
A trader in Pennsylvania said deals are being priced up because there are no bonds coming to market and there is a lot of cash.
"Munis are great right now," a trader in California said. "There might be some sticker shock because rates are low, but they've been close to this low for a while. The more time you have, people become acclimated to the rate environment, and cash is trash and two percent is better than no percent."
The largest deal of the week the Illinois State Toll Highway Authority bonds was priced up to $500 million from a scheduled $450 million.
"We like the intermediate part of the curve, it's a fairly priced intermediate sector," Bacani said in an interview on Tuesday.
Piper Jaffray received the award on $128.2 million of Kansas USD 480 Liberal School District refunding and improvement bonds Friday. The bonds will be free to trade at 12:30 p.m., Eastern time. Yields ranged from 0.32% with a 3% coupon in 2015 to 4.16% with a 4.25% coupon in 2039. The bonds are callable at par in 2022. The bonds mature serially from 2015 to 2039 and are rated A1 by Moody's Investors Service and A-plus by S&P.
There are no deals over $100 million scheduled to enter the competitive market Friday.
