Yields Slide as Muni Market Follows Treasuries

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The Bond Buyer's weekly yield indexes declined this week, as the municipal market followed Treasuries and grew firmer by several basis points in each session.

"A confluence of a very light tax-exempt new-issue calendar and a flight-to-safety bid in Treasuries due to the situation in Libya dragged muni yields lower this week," said Matthew Posner, director of Latin American operations at Municipal Market Advisors. "We saw the best performance in the intermediate range as, day after day, opportunistic sellers were able to move block after block at strong levels."

Though issuance was light in the tax-exempt market this week, a $3.7 billion taxable pension deal for cash-strapped Illinois drew a great deal of attention.

Market participants said the sale received over $6 billion in orders.

The bonds mature from 2014 through 2019 with yields ranging from 4.026% in 2014 to 5.877% in 2019, all priced at par. The bonds were priced to yield between 235 and 280 basis points over the corresponding Treasury yields

The credit is rated A1 by Moody's Investors Service, A-plus by Standard & Poor's, and A by Fitch Ratings.

The Bond Buyer 20-bond index of 20-year general obligation yields declined 15 basis points this week to 4.95%.

This is the lowest level for the index since Dec. 29, 2010, when it was also 4.95%.

The 11-bond GO index of higher-grade 20-year GO yields dropped 14 basis points this week to 4.70%, which is the lowest it has been since Dec. 9, 2010, when it was 4.60%.

The revenue bond index, which measures 30-year revenue bond yields, fell three basis points this week to 5.57%. It is now at its lowest level since Jan. 6, when it was 5.44%.

The Bond Buyer one-year note index, which is based on one-year tax-exempt note yields, dropped two basis points this week to 0.51%, which is the same level it reached two weeks ago.

The yield on the 10-year Treasury note fell 13 basis points this week to 3.45%.

This is the lowest yield for the 10-year note since Jan. 27, when it was 3.40%.

The yield on the 30-year Treasury bond dropped 12 basis points this week to 4.54%, which is the lowest the yield has been since Jan. 13, when it was 4.50%.

The weekly average yield to maturity on The Bond Buyer's 40-bond municipal bond index, which is based on 40 long-term municipal bond prices, declined 10 basis points this week to 5.61%.

This is the lowest weekly average for the yield to maturity since the week ended Jan. 6, when it was 5.54%.

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