The market opened slowly Monday with no large deals slated for issuance. For the first time since Puerto Rico's $3.5 billion junk deal, the new bonds were not the island's most actively traded debt.
General obligation bonds represented 44.81% of market trading for Puerto Rico bonds Monday morning, according to MSRB data. The island's Sales Tax Financing Corp. bonds (COFINA), were the most traded PR bonds at 47.21%. Zero-coupon COFINA bonds with a 6.69% yield maturing in 2044 were the most active.
"I know the euphoria surrounding the Puerto Rico issuance is somewhat over," Bernard Garruppo, chief executive officer of Granite Springs Asset Management, said in an interview. "My opinion is that you need a long term solution. They have a bit of breathing room here, but the long term solution needs to be addressed."
Puerto Rico remains the top issuer in Reuters' Northeast category so far this year, with the commonwealth's $3.5 billion issuance representing 20.3% of all bonds issued in that region.
New York City Transitional Finance Authority and the Port Authority of New York and New Jersey are the second and third-biggest issuers, according to the list, with $1.02 and $1 billion in issuance, respectively.
There are no negotiated or competitive deals over $100 million scheduled for Monday.
Potential volume this week is $4.66 billion, up from $3.18 billion, an increase from where the market has been for the last four weeks, excluding the week ending March 14.
New issuance is led by $793 million of California State's public works lease revenue bonds on Wednesday for the Department of Corrections and Rehabilitation and other various correctional facilities. Morgan Stanley is the lead underwriter and the bonds are rated A2 by Moody's Investors Service, and A-minus by Standard and Poor's and Fitch Ratings.
Treasury yields opened steady Monday morning, as the 30-year yield inched up one basis point to 3.62% and the 10-year benchmark jumped two basis points to 2.77%. Two-year notes rose three basis points to 0.47%.
Yields on short-term and long-term bonds were steady Monday morning. Bonds with maturities from three to eight years softened up to six basis points.
