Puerto Rico bond yields rallied Wednesday and Thursday, a possible signal of a successful sale when the commonwealth comes to market with about $2.8 billion next month.
The spread to the AAA yield on 5 year general obligation bonds dropped 100 basis points to 800 from Wednesday to Thursday, "a tremendous shift," according to Municipal Market Data senior municipal strategist Daniel Berger.
The spread on 10 year GO bonds declined 75 basis points from Tuesday to Thursday.
Spreads on 15 year GO bonds declined 60 basis points, to 490 basis points on Thursday from 550 basis points on Tuesday. The spread on 20 year GO bonds declined 40 basis points in the period, while the spread on 30 year GO bonds dropped to 395 from 420 in the two days.
Berger examined trades of $1 million or more in determining secondary market yields.
The drop is probably a reaction to a webcast on Tuesday in which Puerto Rico officials discussed the government's finances and the island's economy ahead of the planned bond sale, Berger said. The drop in yields is a sign that the sale may succeed, he said.
Puerto Rico bond yields have generally been falling on the secondary market since the start of the new year.
