Maryland's general obligation deal drew attention in the past week as traders were interested to see what impact the "gold standard triple A" issue would have on already tight triple-A Municipal Markets Data scales.
The deal was bid on aggressively in the 10-year maturity range while underwriters paid up for the long 15-year end of the deal, causing less of an impact on the MMD scale than the market had initially braced for. Following the deal's placement, yields on the short end of the MMD curve were unchanged while the eight- to 10 year fell four basis points and the 12- to 29-year fell three.
Traders expected Maryland's competitive deal to have a tangible effect on MMD scales as it was only one in a handful of large, high quality deals to hit the municipal market so far this year. Issuances of this size and security typically serve as bellwethers to the market and have been historically tied to MMD movement.
Secondary trading on Puerto Rico's general obligation bonds was light this week with trading volumes at their lowest levels since early June. For the commonwealth's senior-most 8s in 2035, volume for the week was down 67% to $134.75 from a high of $416.58 million the week of June 23rd, according to data on the Municipal Securities Rulemaking Board's website, EMMA.
While volume contracted the yields held steady on the GOs 8s in 2035, floating just above 9% all week, following a rally that pushed the yield down from a high of 9.87% on July 3rd.
The bulk of the week's trading followed rating changes. After Illinois' outlook was revised to A- negative by Standard and Poor's on Wednesday, the state's GO spreads widened to 3.59% on the 4.27s in 2022 on Thursday from 3.44% the week before. The Chicago Board of Education's GO 5s in 2042 ballooned to 5.10% on Thursday from 5.03% on Wednesday.
Trading volumes on Atlantic City bonds surged to more than twice its 100-day average after the city's credit rating was cut to junk on Wednesday evening, citing declines in casino revenue.
Yields on Atlantic City 5s in 2024 surged 43 basis points from Wednesday's level to 4.16%. The 5s in 2026 and 5s in 2025 also rose by seven basis points to 4.12% and by 33 basis points to 4.05%, respectively.
The week closed strong, however, with Friday's yields on bonds maturing beyond 2041 falling four basis points. The intermediate part of the curve fell as well, with yields down as much as three basis point. Yields on the short end of the curve remained unchanged, according to the Municipal Market Data's triple-A scale.
According to the Municipal Market Advisor's 5% triple-A scale, the 10-year benchmark and the two-year note held steady at 2.19% and 0.31%, respectively. The 30-year yield fell three basis points to 3.38%.
Treasuries strengthened Friday, with the 30-year yield dropping six basis points to 3.24% and the 10-year benchmark falling four basis points to 2.47%. The two-year note slipped one basis point to 0.50%.
