Trading on bonds from Puerto Rico's $3.5 billion general obligation deal in March picked-up on Friday as analysts see its economy slowly stabilizing.
Trading on the benchmark 8% GOs of 2035 was 249.9% above its 100-day average, according to data provided by Bloomberg.
Puerto Rico reducing its debt burden could create "some value at some point" for its GOs, "especially the new deal that has the New York law feature in it," Peter Hayes, managing director and head of the municipal bonds group at BlackRock said at a press conference on Thursday.
Yields on the benchmark GOs rose to 9.10% on Friday from 9.08% on Thursday.
"In MMA's view, PR's systemic impact on the rest of the municipal market has waned, in particular as most large holders have, by now, likely come to grips with the risks in their exposure," Municipal Market Advisors wrote in a report released on Monday.
Alan Schankel, managing director at Janney Capital Markets, wrote in a report released on Thursday that the biggest accomplishment of the $3.5 billion March issuance is it demonstrated market access and replenished badly drained liquidity coffers.
"The proceeds provided much needed liquidity relief to the Puerto Rico Government Development Bank," he wrote.
The analysts pointed to the commonwealth's underlying economic woes as its biggest detriment. Hayes said Puerto Rico's underlying economic fundamentals have not changed and it's a "little bit worrisome" the government has hired so many restructuring firms.
"We're waiting for the big lead foot to drop," he said.
MMA wrote in its report there is still latent risk of market disruption, especially if the commonwealth's financial and solvency issues become more persistent.
"The most challenging hurdle to improvement in Puerto Rico's fiscal condition is the sluggish economy, but there have recently been signs of stability if not growth.," Shankel wrote in the Janney report.
Treasuries were mostly steady Friday afternoon, with the 30-year yield and the 10-year benchmark remaining at 3.44% and 2.59%, respectively, from Thursday's market close. The two-year note rose two basis points to 0.40%.
