Puerto Rico Highways and Transportation Authority bonds traded weaker Friday morning following reports the Authority may default on its bonds as early as next week, even though Puerto Rico Government Development Bank president Javier Ferrer refuted the claim.
"There are a lot of bids-wanted for Puerto Rico highway bonds on the street," a New York trader said. "We had a big hit; down 20 basis points. Maybe this is retail bailing."
He added that while there were a lot of bonds out for the bid, some traders see this as a buying opportunity. "There is a bid side for it. But some people don't believe the story and are looking to pick up cheap bonds and take advantage of retail selling cheap."
Municipal bond scales ended stronger Thursday after posting mostly losses throughout the week.
Yields on the Municipal Market Data triple-A GO scale finished as much as three basis points lower. The two-year yield fell one basis point to 0.28% and the 30-year yield slid two basis points to 2.87%. The 10-year finished steady at 1.75% for the third session.
Yields on the Municipal Market Advisors 5% scale ended as much as two basis points lower. The 30-year yield dropped one basis point to 3.01%. The 10-year was steady at 1.80% for the second session and the two-year finished unchanged at 0.32% for the 24th session.
Treasuries were weaker. The benchmark 10-year yield jumped eight basis points to 1.90% and the 30-year yield spiked 11 basis points to 3.10%. The two-year yield rose one basis point to 0.24%.