The tax-exempt market ended with a steady tone Friday after weakening during every other trading session of the week.
Traders said deals got done despite the weaker backdrop and there was eager trading in the secondary.
Overall for the week, a New York trader said, the new-issue market held its own. "Deals are doing well this week despite the market being weaker," he said. "Overall, it's driven almost entirely by the Treasury move."
Big firms played a part in the market this week, helping deals get out the door despite a weaker market. "A few big California accounts were stepping in and buying bonds," he said.
Earlier on Friday, another New York trader said the market was waiting for bonds issued in the primary market earlier in the week to start trading in the secondary.
"Munis aren't buzzing today," he said. "We are waiting for the California revenue anticipation notes to free up." The state sold $10 billion of Rans earlier in the week.
On Friday, the 30-year Municipal Market Data yield finished flat at 3.01%. The 10-year was steady at 1.87% for the third consecutive trading session, while the two-year closed at 0.29% for the 17th straight session.
Overall for the week, the 10-year yield finished up 11 basis points while the 30-year yield closed up nine basis points.
Treasuries posted gains on Friday after weakening during earlier sessions. The benchmark 10-year yield and the 30-year yield dropped two basis points each to 1.82% and 2.94%, respectively. The two-year yield fell one basis point to 0.29%.
In the secondary market Friday, trades compiled by data provider Markit showed mostly firming. Yields on New York's Triborough Bridge and Tunnel 0s of 2029 dropped four basis points to 3.52%.
Yields on Central Plains, Neb., Energy Project 5s of 2027 and New Mexico State Hospital Equipment Loan Council 4s of 2042 fell three basis points each to 4.08% and 4.06%, respectively. Yields on Somerset County, N.J., 2.25s of 2025 dropped two basis points to 2.37%, while California 5.25s of 2030 fell one basis point to 3.39%.
Looking to next week, the market can expect $5.98 billion to be issued, up from this week's revised $4.76 billion. In negotiated deals, the market can expect $4.89 billion, up from this week's revised $3.53 billion. On the competitive calendar, issuers will bring $1.09 billion, down from this week's revised $1.23 billion.
In particular, Texas is expected to auction $9.8 billion of transportation and revenue anticipation notes, rated MIG-1 by Moody's Investors Service, SP-1-plus by Standard & Poor's, and F1-plus by Fitch Ratings.
"It's the time of year for short-term borrowing," the second New York trader said.
At a time when more municipal bankruptcies and defaults are in the news, Standard & Poor's noted that the total par value of outstanding defaults in the Standard & Poor's Municipal Bond index has risen, but still remains quite low.
As of July 31, outstanding defaulted bonds in the index have risen to over $8 billion, or 0.59% of the index, according to JR Rieger, vice president of fixed income indexes at Standard & Poor's. At the end of last year, the par value of defaulted bonds was $6.6 billion of 0.50% of the index. The index tracks over $1.3 trillion in par value of muni bonds.
Most of the bonds in monetary defaults are non-rated deals that originate from the multifamily, health care, land-backed and corporate backed sectors.
In the multifamily sectors, 13 bond deals were in default, representing a par value of $119.5 million, or 1.48% of the total defaulted bonds. The health care sector had 24 deals in default, or $770.5 million. The health care defaulted bonds contributed to 9.55% of the total defaulted bonds. Land-backed bonds had 80 deals in default, or $1.63 billion, representing 20.27% of the total defaulted bonds in the index. Corporate backed bonds had 45 deals in default, or $3.98 billion, making up 49.32%.
Outside of those four sectors, there were 43 bond deals in default in other categories with a par total of $1.56 billion, representing 19.37% of total defaulted bonds.