NEW YORK — The municipal market has gotten slightly weaker so far Tuesday. Dealers have tried to push trades through in an environment where yields approach or sit at record lows and supply is scarce.
New issuance, in fact, is driving the market Tuesday, a trader in New York said.
“We’re still playing the supply game,” he said. “For now, people want to make a trade, but don’t want to give up the boat for it.”
Tax-exempt yields are seeing moderate weakness, according to the Municipal Market Data scale. Yields for maturities after 2017 are flat to three basis points higher. Still, muni yields remain close to historic lows.
Muni yields were mostly flat across the curve Monday. The 10-year muni yield held at 2.15%, the lowest closing level ever recorded by MMD.
The two-year muni yield stayed at 0.30%, its lowest yield in more than 40 years. The 30-year muni yield ticked up one basis point to 3.80%.
Treasury yields headed into the afternoon weaker across the curve. The benchmark 10-year yield has risen three basis points to 2.12%.
The two-year yield climbed two basis points to 0.23%, five basis points above its all-time low. The 30-year yield is three basis points higher at 3.43%.
New issuance year-to-date remains well below 2010 levels. The situation will likely not improve this week. Industry estimates predict municipal bond sales of $3.65 billion versus a revised $4.72 billion last week.
New issuance Tuesday should give the market more direction, traders have said.
JPMorgan priced for retail $169.2 million of Rhode Island and Providence Plantations general obligation bonds in two series. The bonds are rated Aa2 by Moody’s Investors Service and AA by Standard & Poor’s and Fitch Ratings.
Yields for the first series, $145 million of consolidated capital development loan of 2011, series A, range from 0.45% with a 2.00% coupon in 2013 to 4.00% priced at par in 2031. Credits maturing in 2012, and from 2024 to 2030, were not offered for retail.
Yields for the second series, $24.2 million of consolidated capital development loan of 2011, refunding series B, range from 0.45% with a 4.00% coupon in 2013 to 0.82% with a 5.00% in 2015. Credits maturing in 2012 are not offered for retail.
Wells Fargo Securities priced $166.8 million of Houston combined utility system first lien revenue refunding bonds. The bonds are rated AA by Standard & Poor’s and AA-minus by Fitch.
Yields range from 0.56% with a 5.00% coupon in 2013 to 2.62% with a 5.00% coupon in 2021.
The equity markets have seen strong trading thus far, with the major indexes all up by at least 1.92%. The Dow Jones Industrial Average has gained almost 208 points on the day.
