The municipal bond market went into holiday mode on Tuesday ahead of Wednesday's early market close and the full close on Christmas Day.
Prices of high-quality municipal bonds were mixed at mid-session, according to Municipal Market Data.
Primary Market
Only four deals are slated on today's competitive calendar — one bond sale and three note sales, two each under $1 million — totaling less than $10 million.
No other bond issues are currently scheduled for negotiated or competitive sale until after the start of 2015.
"Unless there are unexpected headline developments in the next few days, look for little else to happen through New Year's," Municipal Market Advisors managing director Matt Fabian writes in a research note.
Looking ahead to January, the Dormitory Authority of the State of New York has scheduled a $1 billion bond sale in a negotiated transaction. DASNY plans to offer $1 billion of general purpose state personal income tax revenue bonds. A group including Barclays, Citigroup and Rice Financial Products is slated to price the bonds.
"The upcoming PIT Bond sale is a refunding for savings, as assumed in the state's current financial plan," a DASNY spokesman told The Bond Buyer.
Also, Washington state will offer about $1 billion of bonds in four separate competitive sales on Jan. 21. The sales will consist of $464.52 million various purpose general obligation refunding bonds, $270 million various purpose GOs, $206 million motor vehicle fuel tax GOs, and $58 million taxable GOs.
And Miami-Dade County, Fla., will put out for bid on Jan. 6 three separate competitive sales of general obligation bonds totaling $372 million. Proceeds from the sales will be used for parks, public health and its "Building Better Communities" program.
Secondary Market
High-grade municipal bond prices were mixed at midday. The yield on the benchmark 10-year general obligation was up as much as one basis point from to 2.07% on Monday while the yield on 30-year GOs was steady from 2.92%, according to a mid-session read of Municipal Market Data's triple-A scale.
Treasury prices were lower on Tuesday, with the two-year note yield rising to 0.73% from 0.65% on Monday. The 10-year yield increased to 2.21% from 2.16% while the 30-year rose to 2.79%, from 2.75% on Monday.
The 10-year muni-to-Treasury ratio was calculated at 95.7% on Monday versus 95.9% on Friday; the 30-year muni to Treasury ratio was at 106.1%, compared with 105.4% on Friday.
"Heavier than anticipated year-end new issue volume contributed to elevated municipal to Treasury ratios in recent weeks," Alan Schankel, managing director at Janney Capital Markets, writes in a research report. "A strong burst of new issuance in early December may be responsible for the higher municipal to Treasury ratios we've experienced in recent weeks."
But the over the longer term, Janney sees ratios heading down.
"We projected a trend towards lower M/T ratios, a view we continue to support, the recent uptick notwithstanding," Schankel says. "Currently elevated M/T ratios offer an opportune entry point for municipal bond investors with uninvested cash. We believe that as ratios trend back to lower levels in coming months, tax free municipal bonds will outperform other fixed-income asset classes."
MSRB: Previous Session's Activity
The Municipal Securities Rulemaking Board reported 30,564 trades on Monday on volume of $5.322 billion.
Most active on Monday, based on the number of trades, was the Bolingbrook, Ill., refunding bonds of 12/29/14 Series A 4s of 2038, which traded 326 times with an average price of 99.686 and an average yield of 4.018%. Second most active was the New Jersey Transportation Trust Fund Authority transportation program bonds, Series AA 4 1/4s of 2044, which traded 121 times with an average price of 99.652 and an average yield of 4.253%.
