NEW YORK – Municipal bonds are weakening for a second day in early trading, guided lower by a Treasury market that is softening in the wake of Greece’s parliament passing austerity measures designed to avoid a default.
Tax-exempts maturing between 2016 and 2021 are seeing yields rise two to four basis points, while longer-term yields are one to three basis points higher, according to Municipal Market Data. Short-term yields are flat.
“Initial trading out of the chute suggested a few stocked bonds were getting sold in addition to some wider than anticipated spreads on broker trades,” said MMD analyst Domenic Vonella.
A pricing wire for Puerto Rico’s first new-money general obligation debt offering in nearly three years hit the wires early morning, but a source at underwriter JPMorgan said the entire deal was sold Tuesday.
The debt was scheduled to be sold over two days, but appetite for the $305 million deal was so robust that the territory added $298 million of refunding debt to the deal. That too cleared Tuesday.
The sale shows investors are ready and willing to step down the credit curve when a good deal presents itself. The territory is rated A3 by Moody’s Investors Service, BBB by Standard & Poor’s, and BBB-plus by Fitch Ratings.
The yield on new-money public improvement bonds maturing in 2041 was 5.95% -- a spread of 127 basis points versus the triple-A scale.
Two prongs of refunding debt were offered with yields ranging from 1.80% in 2013 to 5.83% in 2034. The 2013 yield compares with a 0.42% yield on the triple-A scale.
Puerto Rico bonds offer a triple-whammy tax-exemption for city, state, and federal taxes for investors across the U.S.
Assured Guaranty Municipal Corp. wrapped parts of the new-money debt maturing in 2019 and 2020. Insured yields were 3.875% in 2019, versus a naked yield of 4.25%, and 4.125% in 2020, versus a naked yield of 4.50%.
Elsewhere, the Citizens Property Insurance Corp. in Florida is set to price $900 million of debt through Citi. The deal is rated A2 by Moody's and A-plus by Standard & Poor's and Fitch. The coastal account senior secured bonds include short-term notes, SIFMA floating-rate notes, and taxable LIBOR floating-rate notes.
