The municipal bond market is looking ahead to another week of heavy new issuance, when large offerings from California and Maryland issuers have been slated.
Secondary Market
Treasury prices were lower on Friday. The yield on the two-year Treasury note rose to 0.64% from 0.60% on Thursday, while the 10-year yield increased to 2.03% from 2.00% and the 30-year yield was up to 2.62% from 2.60%.
On Thursday, prices of top-rated munis ended higher. The yield on the 10-year benchmark muni general obligation closed off two basis points to 2.02% from 2.04% on Wednesday, while the yield on 30-year GO was down one basis point to 2.85% from 2.86%, according to the final read of Municipal Market Data's triple-A scale.
The 10-year muni to Treasury ratio was calculated at 100.3% on Thursday versus 103.5% on Tuesday, while the 30-year muni to Treasury ratio stood at 109.3% compared to 111.3%.
Primary Market
On the negotiated slate, Bank of America Merrill Lynch and Morgan Stanley are scheduled to price California's $1.9 billion of general obligation bonds for retail investors on Tuesday followed by the institutional pricing on Wednesday. The deal is rated Aa3 by Moody's Investors Service and A-plus by both Standard & Poor's and Fitch Ratings.
Bank of America Merrill Lynch is also expected to price the Los Angeles Department of Water and Power, Calif.'s $495 million power system revenue bonds.
And Piper Jaffray is expected to price the Citrus Community College District, Calif.'s $700 million Series 2015A general obligation refunding bonds and Series 2015E GOs of election 2004.
On the competitive side, Maryland is scheduled to auction two issues totaling about $922 million on Wednesday. The sales consist of $518 million tax-exempt First Series A State and Local Facilities Loan of 2015 GOs and $404 million First Series B State and Local Facilities Loan of 2015 refunding GOs. The issues are rated triple-A by Moody's, S&P and Fitch.
In the primary market on Thursday, Wells Fargo Securities priced the New York City Transitional Finance Authority's $785 million bond deal for institutional investors. The offering had an order period for retail investors on Tuesday and Wednesday.
The TFA said the sale was increased by $85 million from the $700 million of bonds originally expected to be sold.
"The TFA received over $341 million of retail orders for the bonds during the two-day retail order period preceding Wednesday's sale," the TFA said in a press release. "The TFA received approximately $663 million of priority orders from institutional investors on the approximately $470 million of bonds offered to them."
The bonds are rated Aa1 by Moody's Investors Service and triple-A by Standard & Poor's and Fitch Ratings.
Tax-Exempt Bond Funds See Inflows
Municipal bond funds which report weekly posted $429.330 million of inflows in the week ended Feb. 25, after experiencing inflows of $59.047 million in the week ended Feb. 18, according to the latest Lipper data.
The four-week moving average remained positive at $384.441 million in the latest week after being in the green at $500.240 million in the prior week. A moving average is an analytical tool used to smooth out price changes by filtering out fluctuations.
Muni bond funds so far have experienced inflows in each week of 2015, according to Lipper data. Inflows for the year total about $5.25 billion.
Long-term muni bond funds saw inflows of $308.995 million in the latest week, after experiencing outflows of $118.225 million in the previous week.
High-yield muni funds recorded inflows of $120.709 million in the latest reporting week, after seeing outflows of $219.980 million in the prior week. Exchange-traded funds had inflows of $149.114 million, after recording outflows of $33.536 million in the previous week.
In contrast, long-term municipal bond mutual funds saw $274 million of inflows in the week ended Feb. 18, according to the Investment Company Institute. ICI reported that inflows into long-term funds were $693 million in the previous week.
Tax-Exempt Money Market Funds See Inflows
Tax-exempt money market funds rose $1.98 billion, bringing total net assets to $261.14 billion in the period ended Feb. 23, according to The Money Fund Report, a service of iMoneyNet.com. This follows an outflow of $1.25 billion in the previous week.
The average, seven-day simple yield for the 396 weekly reporting tax-exempt funds remained unchanged at 0.01% for the 95th straight week.
The total net assets of the 991 weekly reporting taxable money funds rose $8.75 billion to $2.441 trillion in the period ended Feb. 24, after seeing an outflow of $21.95 billion in the prior week.
The average, seven-day simple yield for the taxable money funds remained at 0.02% for the sixth consecutive week.
Overall, the combined total net assets of the 1,387 weekly reporting money funds increased $10.73 billion to $2.702 trillion in the period ended Feb. 17, which followed an outflow of $23.20 billion in the prior period.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar increased $2.161 billion to $12.169 billion on Friday. The total is comprised of $3.219 billion competitive sales and $8.949 billion of negotiated deals.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 39,922 trades on Thursday on volume of $15,128 billion.
Most active on Thursday, based on the number of trades, was the Little Rock, Ark., Series 2015 sewer revenue refunding 3 1/2s of 2037, which traded 190 times at an average price of 98.553, with an average yield of 3.579%.
