Municipals close week largely unmoved despite stronger Treasuries; muni index returns 2.55%

By Sheri Kasprzak

New York, Feb. 21 - Municipals ended another session mostly unchanged as new-issue supply dried up and secondary activity remained light, said market sources.

Even as Treasuries improved after a few sour sessions, municipals were mostly flat throughout the session. Weaker existing home sales sent Treasury prices up.

The 30-year Treasury bond fell by 3 basis points to close at 3.689%. The 10-year note yield shrank by 2 bps to 2.728%, and the five-year note yield fell by 1 bp to close at 1.528%.

AMT-free index up 2.55%

Elsewhere during the session, J.R. Rieger, vice president of fixed-income indexes with S&P Dow Jones Indices, said Friday that the tax-exempt investment-grade municipal bond market has returned 2.55% year to date as tracked by the S&P National AMT-Free Municipal Bond index.

Yields in that index have dropped by 58 bps to close at 2.53%.

"One might expect yields of Puerto Rico general obligation bonds to rise in advance of a $3 billion issuing planned for March, but the opposite is happening," Rieger wrote Friday.

"Yields of the S&P Municipal Bond Puerto Rico General Obligation index have come down by 70 bps since February 11 to end last night [Feb. 20] at 7.53% and helping to drive a year-to-date return of over 10%."

Even so, the broader S&P Municipal Bond Puerto Rico index, which includes revenue bonds as well as G.O. bonds, has returned 4.94% year to date.

"The migration of the recently downgraded Puerto Rico bonds into the high-yield index is helping those returns as well. High-yield bonds tracked in the S&P Municipal Bond High Yield index have returned 3.96% year to date," Rieger's report said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.