The secondary market took a backseat Tuesday morning as traders waited for the week's primary issuance to kick off.
All eyes were on the $800 million Illinois deal expected to price in the competitive market. The general obligation bonds will come in two pricings – $350 million and $450 million. The bonds are rated A2 by Moody's Investors Service, A-minus by Standard & Poor's, and A by Fitch Ratings.
"The secondary is quiet," a Chicago trader said, adding the market is looking at primary deals and is also focused on recent headlines coming out of Stockton. A federal judge ruled Monday afternoon that Stockton is eligible to file for bankruptcy.
Outside Illinois, other mid-sized deals were priced. Barclays held preliminary pricing for $380.8 million of Golden State Tobacco Securitization Corp. enhanced tobacco settlement asset-backed bonds, rated A2 by Moody's, A-minus by Standard & Poor's, and BBB-plus by Fitch.
Yields ranged from 1.11% with 3% and 5% coupons in a split 2017 maturity to 4.081% with a 4% coupon and 3.78% with a 5% coupon in a split 2030 maturity. The bonds are callable at par in 2023.
JPMorgan is expected to price $196 million of California Statewide Communities Development Authority pollution control refunding revenue bonds for the Southern California Edison Company, rated A1 by Moody's, A by Standard & Poor's, and A-plus by Moody's.
On Monday, municipal bond scales ended as much as two basis points stronger.
Yields on the Municipal Market Data triple-A GO scale ended as much as two basis points lower. The 10-year yield dropped two basis points to 1.89%. The 30-year yield held steady at 3.09% for the third session and the two-year finished flat at 0.31% for the 29th consecutive session.
Yields on the Municipal Market Advisors 5% coupon triple-A benchmark scale also ended as much as two basis points lower. The 10-year yield slid two basis points to 1.94% and the 30-year yield fell one basis point to 3.18%. The two-year held at 0.33% for the 24th session.
Treasuries were weaker Tuesday morning after a stronger session Monday. The benchmark 10-year yield and the 30-year yield rose two basis points each to 1.86% and 3.10%, respectively. The two-year yield increased one basis point to 0.25%.