Yields on municipal bonds fell Tuesday afternoon as a few of the week's bigger deals came to the market.
With just $2.76 billion in potential issuance scheduled this week, investors Tuesday morning turned their attention to whatever new paper was available.
"Seems like most people are sitting waiting on new deals, the secondary has been pretty light on activity," one trader in New York said in an interview. "The name of the game is looking at new issuance, if the credit fits and hoping to get a decent allocation on it."
Citigroup Global Markets won the bid for $165.3 million of competitive California Department of Water Resources bonds, the largest issue to come to market so far this week.
The California water revenue bonds are rated Aa1 by Moody's Investors Service and AAA by Standard & Poor's.
Yields on the bonds ranged from 0.15% with a 5% coupon maturing in 2015 to 3.82% with a 4% coupon maturing in 2035. The bonds are callable at par in 2024.
"Considering it's high grade, I'd think quite a few people will be focused on that [California deal]," the trader said. "We're looking forward to the Delaware deal [$227 million of general obligation bonds] later in the week."
In the negotiated market, Piper Jaffray was expected to bring $200 million of California School Cash Revenue Program bonds and Ziegler planned to bring $71.5 million of Alachua County East Ridge Retirement Village bonds.
"With a few new issues rolling out today, muni volume should increase over Monday's anemic pace," Janney Capital Markets said in a report Tuesday.
The largest deal of the week, $270 million of Barclays Capital-led tax allocation refunding bonds for the Inland Valley, California Development Agency, originally set for Monday, is now scheduled for Thursday, according to sources.
Muni trading volume was 8% below the average volume Monday, as issuers failed to offer the market any large new deals.
Yields on bonds were lower Tuesday, according to Municipal Market Data. Bonds maturing from 2025 to 2044 fell by as much as two basis points, while those on the shorter end of the curve were steady to one basis point lower.
Treasury yields also firmed Tuesday, with the 30-year benchmark Treasury yield down three basis points to 3.67%, and the ten-year down three basis points at 2.71%. The two-year yield was unchanged at 0.33%.
