Muni Prices Close Out The Week Mixed

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Prices of top-rated municipal bonds finished mixed on Friday, traders said, as yields were unchanged to up by two basis points on the long end.

While watching muni yields closely, market professionals will also be looking at another week of heavy issuance, when almost $9 billion of new supply is set to come to market.

 

Secondary Market

The yield on the 10-year benchmark muni general obligation on Friday was unchanged from Thursday’s reading of 2.02%, while the yield on 30-year GO rose two basis points to 2.87% from 2.85%, according to the final read of Municipal Market Data’s triple-A scale.

For the week, muni yields were little changed on the long end of the curve. On Friday, Feb. 20, the yield on the 30-year was one basis point higher at 2.88%, while the yield on the 10-year was six basis points higher at 2.08%.

Treasury prices were trading lower on Friday. The yield on the two-year Treasury note rose to 0.62% from 0.60% on Thursday, while the 10-year yield increased to 2.01% from 2.00% and the 30-year yield was up to 2.62% from 2.60%.

The 10-year muni to Treasury ratio was calculated at 101.0% on Friday versus 100.3% on Thursday, while the 30-year muni to Treasury ratio stood at 110.5% compared to 109.3%.

 

The Week's Most Actively Quoted Issues

California, Oregon and Puerto Rico names were among the most quoted issues in the week ended Feb. 27, according to data released by Markit.

Among bid-side quotes, the state of California 7 1/2s of 2034 were quoted by 10 unique dealers. Among ask-side quotes, the Oregon Department of Transportation highway user tax revenue 5s of 2030 were quoted by 14 dealers.

And among two-sided quotes, the Puerto Rico Sales Tax Financing Corp. 6.05s of 2036 were quoted by 13 dealers, Markit said.

 

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.

 

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%.

 

Primary Market

About $7.5 billion of new issues came to market in the week, according to Thomson Reuters. Traders said the new supply got a warm reception and was quickly placed.

On Tuesday, Loop Capital Markets priced the largest deal of the week -- Atlanta, Ga.'s $1.245 billion of water and wastewater revenue refunding bonds. Proceeds from the sale will refund about $231 million of 2001A bonds, $479 million of 2004 bonds, and $596 million of 2009A bonds.

On Thursday, Wells Fargo Securities priced the New York City Transitional Finance Authority’s $785 million of tax-exempt fixed-rate refunding bonds for institutions. The TFA said the sale was increased by $85 million from the $700 million of bonds originally expected to be sold.

And JPMorgan Securities priced the Pennsylvania Economic Development Finance Authority’s $719.765 million of tax-exempt private activity revenue bonds for the Pennsylvania Rapid Bridge Replacement project.

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