Municipals end flat ahead of Memorial Day holiday; Pennsylvania G.O. deal to top offerings

By Sheri Kasprzak

New York, May 27 – Municipals rounded out a slow session ahead of the Memorial Day holiday largely unchanged with the 10-year benchmark muni bond yield ending at 1.70% and the 30-year yield at 2.64%.

The market shrugged off some weakness seen in the Treasuries market after Federal Reserve chairwoman Janet Yellen made comments suggesting a rate hike may be appropriate later this year if economic conditions continue to improve.

The 10-year benchmark Treasury note yield rose by 2 basis points to 1.85%, and the 30-year bond yield edged up 1 bp to 2.65%. The five-year note yield climbed 4 bps to 1.39%, and the two-year yield rose 3 bps to 0.90%.

Looking to the week ahead, the light calendar will be highlighted by a significant deal from Pennsylvania.

On Wednesday, the commonwealth is on tap to price $990.55 million of general obligation bonds competitively.

The bonds (Aa3/AA-/AA-) are comprised of $355 million of G.O. bonds and $635.55 million of refunding bonds.

The G.O. bonds are due 2017 to 2036, and the refunding bonds are due 2016 to 2027.

Proceeds will fund transportation projects and refund existing G.O. bonds.

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