The municipal market got off to a slow start as munis slipped on a quieter than normal Monday.
Trading activity has been limited in the primary market due to buyer hesitation as issuance remains low and the quarter comes to a close. The approaching April 15th tax deadline also reduced investors' willingness to make any trades.
"There's not much going on," a trader based in New York said. "There's a weaker tone in the market today. The end of the quarter and tax season plays into this."
While activity in the primary market remains sluggish, the secondary will probably reveal more, a trader based in the West Coast said.
"The secondary is a little heavy on the long end because of the flatting from last week," he said.
New York City's water and sewer system revenue bonds have been the most actively traded bonds Monday, followed by California GOs.
Puerto Rico issuers' bonds were the fifth most actively traded Monday, with its Housing Finance Authority bonds the top traded. The commonwealth GO bonds fall short as the third most actively traded Puerto Rico bonds.
The total potential volume scheduled for this week's new issuance calendar is $4.19 billion, down from last week's $4.78 billion issuance.
"New issuance is low this week, but [the deals] may offer some support once [they] come in," the West Coast trader said.
Low supply continues to plague the market, as two to three mega deals carry most of the week's issuance.
"The University of California deal is the benchmark deal. There's nothing more key that will change the market," the trader said.
Issuance for this week is led by the two-fold University of California deal totaling about $968.2 million, expected Thursday. The deal consists of $559.4 million of tax-exempt revenue bonds and $408.8 million of taxable revenue bonds.
Wells Fargo Securities will bring the tax exempts to market. The bonds mature serially from 2017 to 2034, with terms in 2044 and 2049. The retail order period is scheduled to begin on Wednesday.
Goldman Sachs & Co is the lead underwriter for the taxable bonds, while Wells Fargo is the joint bookrunner. An indication of interest period begins on Wednesday. The deals are rated Aa2 by Moody's Investors Service and AA by Standard and Poor's.
There are no deals over $100 million slated for issuance in the competitive market on Monday.
In the negotiated market, Goldman Sachs will price for retail $261.1 million of dedicated unlimited tax ad valorem property tax GO bonds and refunding bonds for San Diego School District, the largest deal of the day. The bonds are rated Aa3 by Moody's and AA by S&P.
Muni yields softened Monday morning, with bonds maturing from 2021 to 2036 jumping as much as two basis points, while yields on bonds maturing beyond 2037 climbed as much as three basis points. Yields on bonds maturing in the short-term were steady.
Treasury yields were steady Monday afternoon, as the 30-year yield and the two-year note were unchanged at 3.57% and 0.45%, respectively. The 10-year benchmark slid one basis point to 2.75%.
