Yields for Puerto Rico's March $3.5 billion general obligation issuance's bonds fell Thursday.
Yields for the 8% coupon maturing in 2035 bonds dropped to 8.63%, 20 basis points below Wednesday's levels.
"The 8/35s have traded up recently, we are seeing a 92 to 93 market on those," a trader in Virginia said. "Those are trading up because they were trading in the mid-to-high 80s a week ago."
Trading volume for all of the commonwealth's GOs is 4.8% over its 100-day average, and trading for overall Puerto Rico bonds is 118.7% above its 100-day average.
Prices and trading volume on the GOs began rising after Puerto Rico Governor Alejandro Garcia Padilla gave a speech on Tuesday proposing a balanced budget for the fiscally distressed commonwealth.
"After he said he was going to release a balanced budget without any more debt, GOs started to trade up," the trader in Virginia said.
During his speech he said he planned to balance the budget for fiscal 2015 without issuing any more debt.
"I've heard his speech was favorably received, but one of the things he said is they will have a balanced budget this year, which I think is questionable," a trader in Dallas said.
The trader in Virginia described Padilla's budget as "optimistic."
"We will just have to wait and see if anything like that can actually be pulled off," he said.
Puerto Rico's volume is largely being boosted by trading on the Puerto Rico Sales Tax Financing Corporation (Cofina) bonds. Volume for all Cofina bonds is up 1,417.4%, according to data provided by Bloomberg.
The most actively traded Cofina bond is the bond with a zero coupon maturing in 2032. Volume for it is 99,900% above its 100-day average.
Yields on the 2032 maturity plummeted on Thursday, falling 317 basis points to 1.49%. It is now trading 610 basis points below the 7.59% seen on Monday.
Yields had reached a high of 8.24% on April 22nd.
In the competitive market, the Virginia College Building Authority will bring a two-part deal totaling $348.9 million of educational facilities revenue bonds. Series 2014A consists of $320.9 million, while series 2014B is $28 million. The deal is rated Aa1 by Moody's Investors Service, and AA-plus by Standard & Poor's.
The state of Ohio will bring a three-part deal totaling $337.4 million of GO refunding bonds. The deal consists of $161.8 million of common schools GO refunding bonds, $116 million of higher education GO refunding bonds and $59.6 million of infrastructure improvement GO refunding bonds. The deal is rated Aa1 by Moody's and AA-plus by S&P.
The city of Milwaukee will auction a total of $217.4 million of GO notes. The deal consists of $85.9 million of promissory notes Series and $21.5 million of corporate purpose bonds. The bonds are rated Aa3 by Moody's and AA by S&P. A $110 million cash flow promissory notes rounds out the sale.
There are no deals over $100 million expected in the negotiated market Thursday.
Munis were steady Thursday morning, with yields on bonds maturing beyond 2027 falling as much as one basis point, according to the Municipal Markets Data triple-A scale, while those on the intermediate and short-end of the curve were steady with a one basis point roll.
Treasuries were steady Thursday morning, with the 30-year yield and the two-year remaining unchanged from Wednesday's market close at 3.46% and 0.42%, respectively. The 10-year benchmark rose two basis points to 2.64%.
