Traders said they are not looking at the two large competitive deals scheduled to price Tuesday and that the competitive market has been weak lately.
The two deals are $145 million of New Mexico severance bonds, and Dekalb County, Ga.'s $110 million tax anticipation notes.
"On the competitive side, they are looking for leadership but nothing is providing that right now," a trader in Florida said, adding that he is looking at the bigger negotiated deals expected this week.
The New Mexico bonds are rated Aa1 by Moody's Investors Service and AA by Standard & Poor's. The Dekalb, County notes are not yet rated.
The municipal market for the past two weeks has been dominated by sizable negotiated deals such as the New Jersey Turnpike Authority's $1 billion of revenue bonds and the Missouri Highways and Transportation Commission's $920.3 million issue.
"There has been an overall reduced supply in competitive deals," a trader in New Mexico said.
He speculated it might be because local municipalities are seeing better tax revenues and, therefore, have less of a need to borrow.
"There is a conservative spending tone in many areas of the country," he said.
The New Mexico trader said he is not buying the New Mexico severance bonds.
Municipal yields rose slightly in the intermediate and long-ends of the curve on Tuesday increasing by up to one basis point for eight- to 15-year maturities, as much as two basis points for 16- to 24-year maturities, and up to one basis point for 25- to 30-year maturities.
The trader in New Mexico said he declined 10 deals he looked at in both the primary and secondary market on Tuesday morning because they were too expensive.
"I did buy 2031 bonds priced at a 3.21% yield to call," he said. "It had an OAS spread of 113 basis points. It was a buy I thought was worthwhile, and had a 5% coupon. For a good quality bond, it was a good buy."
RBC Capital Markets will issue $111.5 million of New Hope Cultural Education Facilities Finance Corporation student housing revenue bonds for the state of Texas on Tuesday. The deal is rated Baa1 by Moody's.
Treasuries strengthened Tuesday morning, with the 10-year benchmark falling two basis points to 2.53% and the 30-year yields slipping one basis point to 3.38%. The two-year note slid one basis point to 0.35%.
