The Bond Buyer’s weekly yield indexes were mixed this week, as an onslaught of more than $10 billion of primary market supply dominated the municipal market landscape.
Evan Rourke, portfolio manager at MD Sass, said that the focus was on the new-issue market, particularly the $6.5 billion California offering that was priced Tuesday.
“You still have good relative value out there. The California deal obviously had big interest,” Rourke said. “That’s kind of the deal of the week — kept everyone’s attention. ”
California was set to price its $4 billion general obligation offering for institutions Wednesday.
However, after selling $3.2 billion of bonds to retail investors in less than two days of its retail order period, the state Tuesday afternoon accelerated the institutional pricing, bringing the bonds for institutions one day earlier than planned and increasing the size of the deal to $6.5 billion, in order to meet overwhelming demand.
Rourke also said that activity quieted down following the California pricing, as investors attempted to digest the massive deal. The offering was the fourth-largest municipal bond sale in history.
Against that backdrop, The Bond Buyer 20-bond index of 20-year general obligation bond yields rose two basis points this week to 5.00%. However, it remained below its 5.03% level from two weeks ago.
The 11-bond GO index of higher-grade 20-year GO yields was unchanged this week at 4.75%.
The revenue bond index, which measures 30-year revenue bond yields, declined three basis points this week to 5.78%. That marks the lowest level for the index since Feb. 26, when it was 5.76%.
The 10-year Treasury note yield rose 15 basis points this week to 2.75%, but it remained below its 2.88% level from two weeks ago.
The 30-year Treasury bond yield rose four basis points this week to 3.66%. This is the highest that the 30-year bond’s yield has been since Feb. 26, when it was also 3.66%.
The Bond Buyer’s one-year note index, which measures one-year tax-exempt note yields, rose six basis points this week to 0.79%. This is the highest level for the index since Feb. 25, when it was 0.80%.
The weekly average yield to maturity of the Bond Buyer municipal bond index, which is based on 40 long-term municipal bonds’ prices, declined four basis points this week, to 5.57%. But it remained above the 5.55% average for the week ended March 12, 2009.