The last of the big pre-holiday new issue supply hit the municipal bond market on Thursday, with the state of Connecticut taking over as the leader of the pack.
"The primary market was pretty strong," a New York trader said. "The new deals were well received as we head into 'holiday mode' ahead of Thanksgiving week."
Municipal Bond prices were stronger, according to the Municipal Market Data triple-A benchmark scale, with yields declining by as much as three basis points.
"As the week's hefty municipal new issue slate winds down, munis are recovering some of the ground lost in recent days," Janney Capital Markets said in its latest fixed-income strategy and research report.
Primary Market
In the biggest deal of the week, the Nutmeg State sold $550 million of general obligation bonds, some of which are designated as "Green Bonds," which will fund clean water projects all across the state.
JPMorgan Securities priced the bonds in three series.
The $60 million Series G bonds are the Green Bonds and will back the design, construction and improvement of wastewater treatment plants with the aim of reducing pollution. The bonds were priced to yield from 2.89% with a 5% coupon in 2028 to 3.04% with a 5% coupon in 2031.
The proceeds from the $240 million Series F bonds will be used to fund various capital projects, including local school construction. The bonds were priced to yield from 1.06% in 2018 with a 2% coupon to 3.59% with a 4% coupon in 2034. The 2015-17 maturities were offered as sealed bids.
The $259.435 million Series H bonds were priced to yield from 1.06% with a 5% coupon in 2018 to 2.74% with a 5% coupon in 2025. The 2016-17 maturities were offered as sealed bids. The proceeds will be used to refund some of state's outstanding GO debt.
The issue is rated Aa3 by Moody's Investors Service and AA by Standard & Poor's, Fitch Ratings and Kroll Bond Rating Agency.
In other action, Citi won the competitive bidding for Louisiana's $199.99 million of general obligation bonds with a true interest cost of 3.0317. The bonds were sold in two series: a $160.09 million Series 2014-D-1, which were priced as serials to yield from 0.14% with a 5% coupon in 2015 to 3.41% with a 4% coupon in 2034; and $39.9 million Series 2014-D-2, which were priced as serials to yield from 0.14% with 5% coupon in 2014 to 3.41% with a 4% coupon in 2034. The issue is rated Aa2 by Moody's and AA by both S&P and Fitch.
Barclays Capital won the Clark Co., Nev., $100 million of limited tax general obligation flood control bonds with a TIC of 3.4890%. The issue is additionally secured with pledged revenues. The bonds were priced as serials to yield from 0.71% with a 5% coupon in 2017 to 3.72% with a 4% coupon in 2038. The issue is rated Aa1 by Moody's and AA by S&P.
Bank of America Merrill Lynch priced the City and County of Honolulu's $102.005 million water system revenue bonds. The bonds were priced to yield from 2.32% with a 5% coupon in 2023 to 3.56% with a 4% coupon in 2036. The issue is rated Aa2 by Moody's and AA-plus by Fitch.
Another deal of note was the $75.35 million Minnesota Power Agency electric revenue refunding bonds, priced by Bank of America Merrill Lynch. The bonds were priced to yield from 0.50% with a 5% coupon in 2016 to 3.36% with a 5% coupon in 2035. The issue is rated A2 by moody's and A by Fitch.
The deal was particularly well received, according to a New York trader. "Some of the maturities were 10 to 20 times oversubscribed," he said.
Secondary Market
Municipal bond yields were mostly lower at the close, with the benchmark 10-year GO off three basis points to 2.15% and 30-year GO off two basis points to 3.08%, according to the final read of MMD's triple-A scale.
"The muni secondary did not show the random bid hitting we saw on Tuesday trading," according to MMD Senior Market Analyst Randy Smolik. "In fact a better tone evolved as buyers took notice of the attractive ratios to Treasuries attained recently on the MMD curve."
Treasury prices were higher Thursday with the two-year note's yield down two basis points at 0.52% from Wednesday's market close. The 10-year's yield lost two basis points to 2.34% and the 30-year fell three basis points to 3.05%.
On Thursday, the muni to Treasury ratio was mixed. The 10-year muni to Treasury ratio closed lower at 92.1% from 92.8% on Wednesday; it stood at 94.8% on Tuesday and 93.6% on Monday. The 30-year muni to Treasury ratio closed higher at 101.9% from 101.1% on Wednesday; it stood at 101.6% on Tuesday and from 101% on Monday.
Money Market Funds See Inflows
Inflows of $287.7 million into tax-exempt money market funds increased total net assets to $252.80 billion in the week ended Nov. 17, according to The Money Fund Report, a service of iMoneyNet.com.
The flows are down from the $859.4 million that arrived in the prior week.
The average, seven-day yield for the 409 weekly reporting tax-exempt money funds remained at 0.01%, while the average maturity remained at 41 days.
The total net assets of the 996 weekly reporting taxable money funds rose by $14.72 billion to $2.426 trillion in the week ended Nov. 18, up from $8.84 billion of inflows in the prior week.
The average, seven-day yield for the taxable money funds was steady at 0.01%, while the average maturity decreased by one day to 45 days.
Overall, the combined total net assets of the 1,405 weekly reporting money funds was reported at $2.679 trillion after the arrival of $15 billion in the week ended Nov. 18, up from $9.7 billion in the prior week.
