Swap rates have dropped slightly over the past month, according to Euro Brokers Capital Markets.
On Monday, the firm pegged the fixed rate for a two-year swap at 4.22% and the rate for a 10-year swap at 5.19%. The swaps are based on the Public Securities Association's municipal swap index, which was 2.36% on Monday.
One month ago, with the PSA rate at 3.04%, the firm cited a two-year rate of 4.33% and a ten-year rate of 5.25%.
Despite some recent swaps and forward swaps, derivatives activity in the new-issue market remains light. Derivatives professionals attributed the drought to the lack of new-issue volume in the cash market and continuing bad publicity about derivatives.
"A year ago, most issuers had only vaguely heard of derivatives," one professional said. "Now, they've heard of them, but they've heard mostly bad things."
The publicity has slowed down the approval process among issuers considering derivatives, the professional said. "It's had an effect on what people will enter into, what they will entertain to enter into, and on the length of time they will review things," he said.
In other news, TMG Financial Products Inc., a subsidiary of Mutual Life Assurance Company of Canada, hired Daniel P. Curry as an associate in municipal marketing. Previously,
Curry headed the quantitative analysis group in the public finance department of Alex. Brown & Sons Inc. Before working at Alex. Brown, Curry was a public finance analyst at Bear, Steams & Co.
On the ratings front, Moody's Investors Service said it rated two secondary market derivative transactions for the week of June 6. A $4 million block of bonds issued by the Indianapolis Health Care Facilities Authority was structured as floating-rate certificates backed by tender option and remarketing agreements from Bank One in Akron.
A $9 million block of bonds issued by the Commonwealth of Pennsylvania and backed by insurance from AMBAC Indemnity Corp. was structured as custody receipts. Bankers Trust Co. provided a tender agreement for the derivatives.