Overall, traders said new deals were priced attractively and well-received considering supply this week could turn out to be one of the year’s largest weeks of new issuance. Still, there are some bonds on the shelf, these traders noted, and said there could be further weakening to entice buyers.
“It was the biggest issuance week of the year and there was support,” a
By Thursday, the largest deals in the primary market had already been priced and attention turned to the secondary.
“We are trading some new issues coming back to the street,” a
Munis strengthened for a second session Thursday after weakening Monday and Tuesday, according to the Municipal Market Data scale. Yields inside six years were steady while yields outside seven years fell as much as three basis points.
On Thursday, the 10-year yield fell two basis points to 1.87% while the 30-year yield dropped one basis point to 3.17%. The two-year was steady at 0.32% for the 10th straight session.
Treasuries were weaker after a choppy week. The benchmark 10-year yield jumped three basis points to 1.63% while the 30-year yield increased two basis points to 2.73%. The two-year yield rose one basis point to 0.31%.
In the negotiated market,
The bonds yielded 4.23% with a 5% coupon in 2040, 4.50% with 4.25% and 4.5% coupons in a split 2041 maturity, and 4.28% with a 5% coupon in 2044. The bonds are callable at par in 2022.
In the competitive market,
In the secondary market, trades compiled by data provider Markit showed a mix of stronger and weaker munis.
But other trades showed weakening. Yields on
Throughout the month of June, muni-to-Treasury ratios fell as munis outperformed Treasuries and became relatively more expensive.
The two-year muni-to-Treasury ratio plummeted to 103.2% on Thursday from 123.1% on
So far in June, the slope of the yield curve has risen as investors traded in longer-duration bonds for shorter maturities. The one- to 30-year slope of the curve widened to 298 basis points from 284 basis points on
Credit spreads have widened throughout June as investors moved into higher quality bonds on credit fears.
The 10-year triple-A to single-A spread widened to 80 basis points on Thursday from 78 basis points on
In June, muni exchange-traded funds have struggled. The iShares S&P National AMT-Free Municipal Bond ETF – ticker MUB – fell 0.71%. The
Muni ETFs outperformed the ProShares Ultra Seven to 10 Year Treasury ETF – ticker UST – which plummeted 0.96% for the month so far.
Muni ETFs mostly fell short of corporate bond ETFs. The iShares iBoxx High Yield Corporate Bond ETF – ticker HYG – rose 1.12% and the iShares IBoxx Investment Grade Corporate Bond Fund ETF – ticker LQD – fell only 0.49%.
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