Market participants showed apathy to few new bonds available Monday, as municipal bonds extended weakening to a fifth day.
"I've seen about ten trades in the primary," one trader in New York said.
Yields on munis maturing from 2019 to 2020 gained as much as six basis points, while longer-term bonds were steady to somewhat weaker, according to Municipal Market Data's AAA scale.
"The front end of the market was under fire this morning with some cheap trades," a trader based in Florida said in an interview. "Munis seem to be mirroring Treasuries. The backend of the market is okay. There's a sluggish attempt to support the market."
This week's calendar marks a $1 billion increase in issuance compared to last week's modest volume of $3.18 billion, though traders aren't rushing to get their hands on any paper.
"Right now with the shape of the Treasury curve and the seasonal period with tax time, the market place is exhibiting light supply," the Florida trader said. "There's very low volume and light apathy."
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.
"We saw trades this morning below the issue price," the Florida-based trader said. "Focus should not be placed on the fact that COFINAs are trading higher, but that Puerto Rico's GOs are underperforming."
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 slated for Monday.
A retail order period for $480 million of New York water and sewer system second general resolution revenue bonds began Monday, with institutional pricing slated for Tuesday.
Yields ranged from 2.57% with a 4% coupon maturing in 2022 to 4.13% with a 4% coupon in 2039. The bonds, rated Aa2 by Moody's and AA-plus by both S&P and Fitch, are callable at par in 2024. Retail orders for bonds maturing in 2035 and 2039 are unavailable.
"In the negotiated market, there's the New York water deal that I'm keeping my eye on. The bonds have a retail order period that's pricey," a trader said.
Treasury yields remained relatively steady with the two-year at .45%, the 10-year at 2.73% and the 30-year at 3.57%.
