Municipal bonds saw very limited trading in the secondary markets Friday and had minimal price changes, as well.

No new issues of consequence were priced, which gave many participants some breathing room and time to look ahead to the sizable amount of new deals expected next week.

In terms of day-to-day total returns:
  • The high-grade, short end of the curve showed a total return of positive 0.01%, according to Municipal Market Advisors (MMA) data.
  • The high-grade, intermediate part of the curve showed a total return of positive 0.02%.
  • The high-grade, long end of the curve showed a total return of positive 0.03%.

The high-grade marketplace of bonds rated double-A or better enjoyed a reprieve from the consistent yield increases this market has seen over the past two weeks. The market was quiet and little changed. Secondary activity was light. Bids-wanted or "for-sale" lists of municipals totaled just over $300 million around 12:30 p.m. Friday. On an average day, the total would be $500 million to $600 million by that time.

In the non-investment grade sector of non-rated bonds or triple-B and lower, very little occurred. This segment of the market, despite the past week or so, has so far outperformed the high-grade market after making big strides in January and most of February. With continued rumors of large sellers, many market-makers here are sitting on the sidelines waiting to see what happens.

The new-issue calendar was minimal. However, next week's supply totals just north of $5 billion. This week the total was around $3.2 billion, according to rough estimates. Throughout this past week, traders often noted that new issues were weighing on the market. With a bigger slate scheduled ahead, new issue supply could factor into trading levels next week, possibly in a negative way.

The five largest scheduled deals for next week, with as much information as has thus far been made public:
  • $550 million tax-exempt general revenue bonds for the Regents of the University of California; Aa3; (retail March 11/institutional March 12)
  • $445 million personal income tax secured revenue bonds for the District of Columbia; Aa2/AAA/AA; (March 10)
  • $435 million higher education university revenue bonds for the University of Pittsburgh; Aa2/AA/NR; (retail March 9/institutional March 10)
  • $350 million highway user tax revenue bonds for the Oregon Dept. of Transportation; (March 11)
  • $330 million revenue bonds for Vanderbilt University, Tenn.; (March 10)

After record-breaking municipal bond mutual fund outflows in the fourth quarter of 2008, this year has thus far been the opposite. Inflows began in January and continued through February.

If you're interested in learning more about muni's and our upcoming premium service Muni Markets Daily, email us at muni@thestreet.com.

Tax Exempt Mutual Fund Inflows ($Bil)
Municipal Market
Advisors

Matthew Posner is a director with Municipal Market Advisors. Posner writes intraday research, data and commentary on the municipal market and heads up the firm's efforts in Washington, D.C., as an educator of policy markers on the tax-exempt securities market. Founded in 1995, MMA is the leading independent strategy, research and advisory firm in municipal bond industry.

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