The municipal bond market experienced another quiet week as traders said limited supply, little news to trade on, and a stable Treasury market kept muni yields rangebound.

Click to see video

Throughout the week, muni bond traders said primary deals were well received as demand outweighed supply, though focus shifted to the secondary markets.

“Trading on the secondary is still totally dependent on the primary,” said Dan Toboja, vice president at Ziegler Capital Markets. “As deals free up some bonds trade up on the secondary, but the broader market doesn’t budge.”

In the primary market this week, $5.08 billion came to market, including $3.72 billion on the negotiated calendar and $1.36 billion in competitive deals.

The largest deal of the week — $490 million of Santa Clara County, Calif., general obligation bonds — was postponed, trimming the calendar further. The deal is now scheduled to price Wednesday, Feb. 20.

Of the deals that did price, market participants said they were well received. “I think the market was productive this week, particularly on new issue side,” said Pete Stare, underwriter at FirstSouthwest. “Deals got done and got slight bumps to them.”

He added demand was lukewarm. “The deals that were getting done were one to two times oversubscribed. It wasn’t absolute riots. But money is still out in the market and with a manageable calendar this week the market held firm, as opposed to the last two weeks where we got slammed.”

In the secondary market, there was a significant amount of trades, according to the Municipal Securities Rulemaking Board. Still, traders said the week felt quiet.

“Overall the tone remains the same with the vast majority of trading on the secondary being dealers taking inventory and fewer customer sells,” Toboja said. “But with consistent [muni bond] inflows dealers are confident the market will at least remain status quo. Demand for kicker paper continues to be especially strong with some dealers willing to pay significant numbers for the defensive structure.”

On Monday, there were 38,257 trades, up from the 30-day average of 37,911 trades. Par amount traded was $9.657 billion, down from the 30-day average of $10.534 billion.

On Tuesday, there were 41,992 trades, above the 30-day average of 37,576 trades. Par amount traded was $10.770 billion, just above the 30-day average of $10.366 billion.

By Wednesday, there were 44,542 trades, above the 30-day average of 37,690 trades. Par amount traded was $12.528 billion, above the 30-day average of $10.431 billion.

On Thursday, there were 41,714 trades, above the 30-day average of 38,608 trades. Par amount traded was $12.990 billion, up from the 30-day average of $10.700 billion.

“Older positions started to clean up and I think that was productive because it allowed secondary traders to look for new positions,” Stare added. “And as long as we have manageable new issue supply the market should have fairly positive bias to it.”

Muni bond market reads were steady to a bit higher as of Thursday’s close.

The 10-year Municipal Market Data yield finished Thursday two basis points lower to 1.80% while the 30-year yield closed steady at 2.86%.

The 10-year Municipal Market Advisors yield closed Thursday down one basis point to 1.83% for the week while the 30-year yield finished steady at 2.94%.

Treasury yields also ended lower for the week. The 10-year yield finished Friday three basis points lower to 1.98% while the 30-year yield closed down two basis points for the week at 3.19%.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.