Market Post: N.J. Postponement Allows Market to Breathe

A quiet afternoon in the municipal bond market looked to dip in activity even more after New Jersey Friday postponed its $350 million competitive sale of general obligation bonds to May 1.

The New Jersey sale was initially scheduled for Tuesday. A spokesman said the state had just issued two big deals - $877 million of New Jersey Transportation Trust Fund Authority and about $300 million of New Jersey Healthcare Financing Authority - and wanted to give the market time to digest those deals. The competitive calendar Tuesday also looked crowded, the spokesman said.

Market participants said delaying the sale would probably help the state. "New Jersey has issued almost $1.8 billion of bonds between three recent deals," a New York trader said. "It is just a lot of paper at one time from one state. So I don't think it's unusual to postpone GOs in light of recent issuance."

He added part of the concern could be softer bonds in the secondary. "You don't want to be in a situation where you have trouble getting the deal done. The market needs a breather before they bring the deal out and it's not the worst thing."

Without the New Jersey deal, the market was quiet. "It's pretty quiet," a second New York trader said. "Same Monday stuff."

Later Monday, Wells Fargo is expected to price for retail $400 million of California State Public Works Board lease revenue bonds for the Judicial Council of California, the Yuba City Courthouse and lease revenue refunding bonds for the Department of State Hospitals, Coalinga. The bonds are rated A2 by Moody's Investors Service, A-minus by Standard & Poor's, and BBB-plus by Fitch Ratings. Institutional pricing is expected Tuesday.

Bank of America Merrill Lynch should price $101.4 million of Virginia Housing Development Authority taxable mortgage bonds, rated Aa2 by Moody's and AA by Standard & Poor's.

Friday, municipal bond scales ended a mixed week one basis point softer.

Yields on the Municipal Market Data triple-A GO scale ended as much as one basis point higher. The 30-year yield rose one basis point to 2.90%. The 10-year yield finished flat at 1.70% for the third session and the two-year closed steady at 0.29% for the 11th session.

Yields on the Municipal Market Advisors 5% coupon triple-A benchmark scale also ended as much as one basis point higher. The 10-year yield increased one basis point to 1.77%. The 30-year closed flat at 3.02% for the second session and the two-year was flat at 0.32% for the 11th session.

Treasuries were mostly flat Monday afternoon. The two-year and 30-year yields were steady at 0.23% and 2.88%, respectively. The benchmark 10-year yield fell one basis point to 1.70%.

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