The municipal market opened slowly Monday with light trading activity led by a thin new issue calendar as market participants remain starved for paper.
"The calendar this week is extremely small and quiet," a New York trader said.
New money issuances are scarce this week as a majority of the deals will be refundings.
"Rates have come down so much," the New York trader said. The MMD scale has come down significantly in the past two weeks. Since July 15 yields have dropped 25 basis points so it's a good time to issue refundings."
The imbalance between supply and demand has grown more severely in the past two weeks traders said.
"There's an avalanche of cash because of redemptions in July that they need to put to work before rates get lower," the New York trader said. "That's why there's such a significant demand that is outpacing supply."
Market participants expect the disparity to persist in the upcoming weeks.
The largest deal scheduled to enter the negotiated market this week is the $350 million San Diego Regional Transportation Commission revenue bonds deal set for pricing Wednesday.
Compared to last week's largest deal, investors said the San Diego deal amounts to virtually nothing.
Citigroup Global Markets is the lead underwriter. The bonds mature from 2015 to 2048. The deal is rated AAA by both Standard & Poor's and Fitch Ratings.
Stifel Nicolaus will bring $303.5 million of University of Colorado Regent revenue and refunding bonds. The credit's rating was unavailable at press time.
Barclays will price $212.9 million of Kansas Department of Transportation highway revenue refunding index bonds. The credit's rating was unavailable at press time.
The only large deal scheduled in the competitive market this week is $345.2 million Wake County, N.C., general obligation public improvement bonds on Tuesday. The bonds mature from 2016 to 2034. The deal is rated triple-A by Moody's Investors Service, S&P and Fitch.
