After posting losses throughout the week, the municipal bond market stabilized Thursday as the market began to settle.
Still, two major deals have been postponed this week — a $500 million Illinois deal and a $258 million Wisconsin deal — showing investors the market is still skittish.
Goldman, Sachs & Co. was expected to price on Thursday $258 million of Wisconsin transportation revenue bonds, rated Aa2 by Moody's Investors Service and AA-plus by Standard & Poor's and Fitch Ratings. The deal was postponed due to market conditions.
"We were ready to go today, but decided against it," said David Erdman at the Wisconsin Capital Finance Office. "We are monitoring the market and will move forward when the market has better tone."
Pete Stare, an underwriter at FirstSouthwest, said the market started to steady after weakening earlier in the week. "The first three days of the week were fairly ugly. Balances were left over from last week and deals coming to market had more balances than people had been underwriting. The market felt heavy."
Thursday afternoon, munis started to even out after Treasuries stabilized. "Treasuries found stability and munis reacted same," Stare said. "One deal in Texas saw some bumps while another just got done. But it beats the heck out of the first part of the week."
He added that the two deals that were postponed in the primary market took a little pressure off munis. "It's mostly steady now. In the secondary, guys are better sellers than buyers because they are heavier than they want to be."
Elsewhere in the primary, Goldman is expected to price for institutions $335 million of Bay Area Water Supply and Conservation Agency tax-exempt and taxable revenue bonds for the Capital Cost Recovery Prepayment Program. The bonds are rated Aa3 by Moody's Investors Service and AA-minus by Standard & Poor's.
In retail pricing Wednesday for the $237.5 million tax-exempt series, yields ranged from 0.32% with a 1% coupon in 2014 to 3.10% with a 4% coupon in 2034. The bonds are callable at par in 2023. Credits maturing between 2025 and 2027 and between 2029 and 2033 were not offered for retail.
Municipal bond market reads showed a softer market.
The Municipal Market Data scale ended lower for the fifth consecutive session. The 10-year yield jumped two basis points to 1.82% while the 30-year yield spiked three basis points to 2.87%. The two-year finished steady at 0.34% for the third session.
The Municipal Market Advisors 5% coupon triple-A benchmark scale also showed softer trades. The 10-year yield and the 30-year yield rose two basis points each to 1.84% and 2.94%, respectively. The two-year held steady at 0.35% for the third session.
Treasuries continued to trade steady Thursday afternoon. The benchmark 10-year yield and the 30-year yield were flat at 2.00% and 3.19%, respectively. The two-year was steady at 0.27%.
