Muni Market Preps for Holiday, Next Week's New Issues

The municipal bond market is gearing up to take off as the three-day holiday weekend looms large. The bond and stock markets are closed on Friday in observance of the Independence Day holiday. Trading will resume on Monday.

Municipal bond traders were also looking at the post-holiday calendar of new volume, which is topped by North Carolina Municipal Power Agency's $463 million negotiated deal.

Secondary Trading

Treasury prices were mixed on Thursday with the yield on the two-year Treasury note falling to 0.65% from 0.68% on Wednesday, while the 10-year yield fell to 2.40% from 2.43% and the 30-year yield increased to 3.21% from 3.20%.

The yield on the 10-year benchmark muni general obligation on Wednesday rose four basis points to 2.32% from 2.28% on Tuesday, while the yield on the 30-year GO was up five basis points to 3.33% from 3.28% according to the final read of Municipal Market Data's triple-A scale.

The 10-year muni to Treasury ratio was calculated on Wednesday at 96.0% versus 97.6% on Tuesday, while the 30-year muni to Treasury ratio stood at 104.3% compared to 105.6%, according to MMD.

Puerto Rico GOs Trading Higher

Prices of Puerto Rico debt were firm on Thursday. Puerto Rico bonds moved higher on Wednesday after plunging in Monday trading after a published report quoted Gov. Alejandro García Padilla as saying the commonwealth couldn't pay its $72 billion in debt.

The Puerto Rico commonwealth Series 2014A general obligation 8s of 2035 on Thursday were trading as low as 68.75 cents on the dollar, a high yield of 12.209%, according to the Municipal Securities Rulemaking Board's EMMA website. There was only one early trade totaling $4 million.

On Wednesday, the GO 8s of 2035 were trading as low as 68.25 cents on the dollar, a high yield of 12.301%; there were 30 trades totaling $41.89 million. In trading on Tuesday, when the GOs traded as low as 64 cents on the dollar, a high yield of 13.13%, in 110 trades totaling $223 million. On Monday, the GOs traded as low as 68.30 cents on the dollar, a high yield of 12.291%, in 93 trades totaling $141 million. This contrasts to last Friday, the GOs traded as low as 76.75, a high yield of 10.874%; there were 19 trades totaling $22 million.

Separately on Thursday, the commonwealth Series 2012A GO public improvement 5s of 2041 also rose from Wednesday and were trading as low as 59 cents on the dollar, according to EMMA, a high yield of 9.162% in three trades totaling $860,000.

On Wednesday, the 5s of 2041 were trading as low as 57.25 cents on the dollar, a high yield of 9.439%, in 85 trades totaling $43.29 million. On Tuesday, the bonds were trading as low as 51.625 cents, a high yield of 10.434%, in 125 trades totaling $44.29 million. On Monday, the bonds traded at a low price of 51.716, a high yield of 10.416%, in 48 trades totaling $26.57 million. On Friday, the bonds traded as low as 63.033, a high yield of 8.571% in 33 trades totaling %15.42 million, according to EMMA.

Primary Market

Topping next week's calendar is the North Carolina Municipal Power Agency Number 1's $463 million of refunding bonds scheduled to be priced by Morgan Stanley. The issue is initially structured as Series 2015 A, B and C refunding bonds, Series 2015 D taxable refunding bonds and Series 2015 E forward delivery bonds. The issue is rated A by Standard & Poor's and Fitch Ratings.

The Illinois State Toll Highway Authority's $400 million of Series 2015A toll highway senior revenue bonds are expected to be priced by Bank of America Merrill Lynch on Wednesday. The bonds are rated Aa3 by Moody's Investors Service and AA-minus by S&P and Fitch.

JPMorgan is slated to price Austin, Texas' $290 million of Series 2015A and taxable Series 2015B wastewater system revenue refunding bonds. The issue is initially structured as serials maturing from 2016 through 2035. The bonds are rated Aa2 by Moody's, AA by S&P and AA-minus by Fitch.

BAML is slated to price the LifeBridge Health Hospital's $200 million of hospital revenue bonds on Wednesday.

In the competitive sector, the Central Florida Expressway Authority is set to sell $194 million of Series 2015 senior lien revenue bond anticipation notes on Wednesday. The BANs are rated A2 by Moody's and A by S&P and Fitch.

The city and county of San Francisco is set to sell two separate issues of certificates of participation totaling about $135 million on Wednesday. The sales consist of $111 million of Series 2015A COPs for the War Memorial Veterans Building seismic upgrade and improvements and $24 million of Series 2015B taxable COPs for the War Memorial Veterans Building seismic upgrade and improvements. The issues are rated Aa3 by Moody's, AA by S&P and AA-minus by Fitch.

Hillsborough County, Fla., is set to sell 140 million of Series 2015 community investment tax refunding revenue bonds on Wednesday. The bonds are rated AA2 by Moody's.

The Metropolitan Council of Minnesota is slated to sell three separate issues of general obligation bonds totaling $151 million on Wednesday. The sales consist of $100 million Series 2015C GO wastewater revenue bonds, $45 million of Series 2015A GO transit bonds and $$6 million of Series 2015B GO park bonds.

The Clark County water District, Nev., will sell $100 million of Series 2015 limited tax GO water reclamation refunding bonds, which are additionally secured by pledged revenues. The issue is rated Aa1 by Moody's and triple-A by S&P.

Tax-Exempt Money Market Funds Post Outflows

Tax-exempt money market funds experienced outflows of $2.16 billion, bringing total net assets to $241.71 billion in the period ended June 29, according to The Money Fund Report, a service of iMoneyNet.com. This followed an outflow of $1.24 billion to $243.88 billion in the previous week.

The average, seven-day simple yield for the 390 weekly reporting tax-exempt funds remained at 0.01% for a 113th straight week.

The total net assets of the 986 weekly reporting taxable money funds rose $5.23 billion to $2.395 trillion in the period ended June 30, after experiencing an outflow of $14.99 billion to $2.370 trillion in the prior week.

The average, seven-day simple yield for the taxable money funds remained at 0.02% for the 24th consecutive week.

Overall, the combined total net assets of the 1,376 weekly reporting money funds increased $3.06 billion to $2.637 trillion in the period ended June 30, which followed an inflow of $18.61 billion to $2.634 trillion the week before

MSRB Previous Session's Activity

The Municipal Securities Rulemaking Board reported 43,583 trades on Wednesday on volume of $11.349 billion.

The most active bond, based on the number of trades, was the Miami-Dade County, Fla., Series 2015A aviation revenue and revenue refunding 4 1/4s of 2036, which traded 179 times at an average price of 99.735 with an average yield of 4.268%. The bonds were initially priced at 98.073 to yield 4.39%.

Bond Buyer Visible Supply

The Bond Buyer's 30-day visible supply calendar increased $3.52 billion to $9.09 billion on Thursday. The total is comprised of $3.08 billion competitive sales and $6.01 billion of negotiated deals.

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