Non-Investment Grade –
Sallie Mae (SLMA) – For a second day paper issued by education-funding and student loan originator Sallie Mae was active in the secondary market. Traded volume on Tuesday morning of $15mm was around half of that of Monday. Since mid-January the paper has outpaced an index of three-to-five year government treasuries by 3.70% while recent volume patterns suggest that investors continue to find value in Sallie’s paper even as bond prices come off. The paper carries a mid-yield at 5.19% on Tuesday.
Anadarko Petroleum Corp. (APC) – Once again the pattern of heavier trading is showing up volume of Anadarko’s secondary paper. On half of the last 12 trading days volume has exceeded $25mm with today’s volume currently standing at $8mm making it the third most actively traded non-investment grade paper. Investors once again advanced prices sending the issue higher by 40cents per $1,000 invested allowing the yield on its September 2017 issue to decline to 3.77%.
Muni-Bond Corner -
Thirty-day visible supply has almost doubled to $9.9 billion from a recent low of $5.2 billion at the end of May. Supply in the market for municipal bonds has had a direct impact on the direction of yields. The recent drop-off in issuance has allowed yields to trade lower along with the broader government securities market. Year-to-date issuance has been tepid as states get their budgets in line but with many states’ fiscal years beginning next month this should add to issuance in the second half of the year.
Andrew Wilkinson is a Senior Market Analyst at Interactive Brokers LLC
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