Municipal bond traders are looking ahead to the upcoming week's dramatically lighter calendar, which has no new issues over $250 million on it.
Some analysts speculated the Treasury Department's suspension of sales of state and local government series securities may be starting to affect some refundings.
SLGS are special purpose Treasuries that help issuers avoid violating arbitrage rebate or yield restriction requirements. Issuers mostly buy SLGS for advance refunding escrows to make sure their investment yield won't significantly exceed the yield of their refunding bonds.
However, other market participants said it was unlikely that the SLGS suspension would delay any bond sales.
Secondary Market
Treasury prices were mixed on Friday as the yield on the two-year Treasury note dropped to 0.52% from 0.53% from Thursday, while the 10-year yield declined to 1.92% from 1.96% and the 30-year yield was flat at 2.64%.
Prices of top-quality municipal bonds finished weaker on Thursday. The yield on the 10-year benchmark muni general obligation rose one basis point to 2.01% from 2.00% on Wednesday, while the yield on the 30-year GO increased one basis point to 2.92% from 2.91%, according to the final read of Municipal Market Data's triple-A scale.
The 10-year muni to Treasury ratio was calculated on Thursday at 103.3% versus 101.5% on Wednesday, while the 30-year muni to Treasury ratio stood at 110.8% compared to 109.7%.
Primary Market
Looking ahead to next week, the volume is set to drop off dramatically.
The biggest deal on the upcoming negotiated calendar is a $209 million sale from the Grossmont Healthcare District in California. Goldman, Sachs is scheduled to the price the general obligation bonds on Tuesday. The GOs are rated Aa2 by Moody's Investors Service.
The largest sale in the competitive arena will be the Humble Independent School District, Texas' $218.01 million offering of Series 2015A unlimited tax school building and refunding bonds. The deal is backed by the Texas Permanent School fund guarantee and rated triple-A by Moody's and Standard & Poor's.
The last time the district sold bonds competitively was on April 10, 2007, when Prager Sealy won $25 million of Series 2007A unlimited tax school building bonds with a true interest cost of 4.6243%
Tax-Exempt Bond Funds See Inflows Again
Municipal bond funds which report weekly, posted $534.645 million of inflows in the week ended April 22, after experiencing outflows of $486.312 million in the week ended April 15, according to the latest Lipper data.
It was the first time this month that flows were positive, reflecting the seasonal outflows usually experienced during tax filing season.
The four-week moving average remained negative at $71.264 million in the latest week after being in the red at $59.509 million in the prior week. A moving average is an analytical tool used to smooth out price changes by filtering out fluctuations.
Long-term muni bond funds saw inflows, gaining $551.993 million in the latest week, after experiencing inflows of $237.634 million in the previous week.
High-yield muni funds recorded an inflow of $374.224 million in the latest reporting week, after seeing inflows of $49.576 million in the previous week. Exchange-traded funds had inflows of $43.787 million, after recording inflows of $126.797 million in the previous week.
In contrast, long-term municipal bond mutual funds posted $943 million of outflows in the week ended April 15, according to the Investment Company Institute. ICI reported outflows from long-term funds of $187 million in the previous week.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar decreased $1.410 billion to $6.889 billion on Friday. The total is comprised of $3.061 billion competitive sales and $3.828 billion of negotiated deals.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 41,863 trades on Thursday on volume of $16.567 billion.
The most active bond, based on the number of trades, was the Pennsylvania State Turnpike Commission's 2015 Subordinate Sub-Series A-1 revenue 4s of 2041, which traded 654 times at an average price of 99.502 with an average yield of 4.027%. The bonds were initially priced at 98.386 to yield 4.10%.
