NEW YORK — A stronger municipal market has crossed noon with falling yields, particularly around the belly of the curve.
Traders are seeing high grades in the 10-year range trade up a basis point or two. The market is bracing for the coming volume, hinging mostly on three large deals.
“It’s good to see some issuance back in the market,” a trader in New York said. “In the long run, it’ll be healthy for the market to get a little backup in here.”
The past couple of weeks have seen mixed results with all of the new volume, he said. Last week’s deals did fairly well and traded well afterwards, the trader added. But the week before was very, very difficult.
The supply loosens up some of the bonds that are being held by institutions. This, in turn, offers a chance for more bonds to come into play in the secondary, he explained.
Tax-exempt yields have mostly been firming Monday. They were steady through five years, according to the Municipal Market Data scale.
From six to 10 years, they are flat to three basis points lower. Those from 11 to 16 years have fallen one to five basis points. Beyond that, they are flat to two basis points lower.
The benchmark 10-year muni yield ticked up one basis point Friday to 2.56%.
The 30-year yield inched up one basis point, as well, Friday to 3.72%. The two-year yield held steady at 0.45% for a third consecutive session.
Treasury yields crossed noon mostly lower, particularly from the belly of the curve on out. The benchmark 10-year Treasury yield has dropped five basis points to 2.20%.
The 30-year has also decreased five basis points to 3.18%. The two-year yield has inched up a basis point to 0.28%.
The industry estimates the municipal bond market should see an expected $6.7 billion in new issuance this week. Last week’s number was revised downward to $4.5 billion. Three deals in particular are expected to provide a large block of the volume.
Goldman, Sachs & Co. led 28 other firms when it priced for retail $1.8 billion of California tax-exempt various purpose general obligation bonds. The bonds are rated A1 by Moody’s Investors Service and A-minus by Standard & Poor’s and Fitch Ratings.
Yields ranged from 1.15% with coupons of 3.00% and 4.00% in a split maturity to 4.87% with coupons of 4.75% and 5.00% in a split maturity in 2041. Debt maturing in 2025, 2027, 2028, and 2029 were not offered for retail.
