Prices of top-quality municipal bonds ended weaker on Thursday, traders said, with yields on some maturities rising by as much as four basis points at the close. In the previous three trading sessions, yields had remained little changed.
It was back to school in the primary, as deals from the Virginia College Building Authority, Philadelphia School District and Texas' Northeast Independent School District all came to market.
Secondary Market
The yield on the 10-year benchmark muni general obligation rose three basis points to 1.96% from 1.93% on Wednesday, while the yield on 30-year GO increased four basis points to 2.80% from 2.76%, according to the final read of Municipal Market Data's triple-A scale.
Treasury prices were lower on Thursday. The yield on the two-year Treasury note rose to 0.62% from 0.59% on Wednesday, while the 10-year yield increased to 2.00% from 1.92% and the 30-year yield jumped to 2.59% from 2.50%.
The 10-year muni to Treasury ratio on Thursday was calculated at 96.3% versus 100.5% on Wednesday, while the 30-year muni to Treasury ratio stood at 107.0% compared to 110.3%.
Primary Market
JPMorgan Securities priced the Virginia CBA's $668.98 million 21st Century College and Equipment Programs educational facilities revenue and revenue refunding bonds in two series.
The $463.61 million Series 2015A revenue bonds were priced as 5s and 3s to yield 0.52% in 2017 to 3.31% with a 4% coupon in 2035; a 2016 maturity was offered as a sealed bid. The $205.37 million Series 2015B revenue refunding bonds were priced as a 2027 bullet maturity at par to yield 2.17%. Both series are rated Aa1 by Moody's Investors Service and AA-plus by Standard & Poor's and Fitch Ratings.
Since 1995, the Virginia CBA has sold roughly $9.35 billion of bonds, with the largest issuance coming in 2009 and 2012 when it sold $1.69 billion and $1.05 billion, respectively. The lowest years came in 1995 and 1996 when it sold just $24.7 million and $101 million, respectively.
Also on Thursday, Bank of America Merrill Lynch priced two issues for the Philadelphia School District totaling $142.13 million. The $128.62 million Series 2015D GO refunding bonds were priced as 5s to yield from 0.71% in 2016 to 2.52% in 2022. The $13.51 million Series 2015B GO refunding bonds were priced as 4s to yield 0.38% in 2015 and as 5s to yield 0.71% in 2016. Both issues are rated A1 by Moody's and A-plus by S&P due to insurance by the Pennsylvania State Aid Intercept Program.
Citigroup Global Markets priced the Northeast Independent School District, Texas' $345.19 million of bonds late on Wednesday. The bonds were priced as 2s to yield 0.35% in 2016 and as 3s to yield 0.70% in 2017 and to yield from 1.64% with a 5% coupon in 2021 to 3.30% with a 4% coupon in 2037. The bonds are backed by the Permanent School Fund guarantee program and rated triple-A by Moody's and S&P.
"This is an advanced refunding, not as large as doing a current refunding," Brian Moy, the district's senior director of budgets and financial analysis said in an interview, "But with this current market there is too much savings available to the taxpayer for us to wait around for two more years,"
Moy also said that since 2012, the district has been more active and restructuring its debt.
"With this issue and another sale of $57.9 million of refunding bonds in May the district will have refunded all callable debt issued prior to 2012," he said.
Additionally, Morgan Stanley priced the Corpus Christi Utility System, Texas' $142.03 million Series 2015 A&B junior lien revenue bonds. The $92.43 million Series 2015A bonds were priced to yield from 0.40% with a 3% coupon in 2016 to 3.36% with a 5% coupon in 2035; a 2040 term bond was priced as 5s to yield 3.44% and a 2045 term was priced as 5s to yield 3.49%. The $49.61 million Series 2015B bonds were priced as a 2045 bullet maturity as 2s to yield 0.95%. The issue is rated A1 by Moody's and A-plus by S&P and Fitch.
Tax-Exempt Money Market Funds Post Outflow
Tax-exempt money market funds had an outflow of $521.6 million, bringing total net assets to $259.47 billion, in the period ended March 23, according to The Money Fund Report, a service of iMoneyNet.com. This followed an outflow of $443.7 million to $259.99 billion in the previous week.
The average, seven-day simple yield for the 396 weekly reporting tax-exempt funds remained at 0.01% for a 99th straight week.
The total net assets of the 992 weekly reporting taxable money funds rose $32.79 billion to $2.461 trillion in the period ended March 24, after experiencing an outflow of $19.06 billion to $2.428 trillion in the prior week.
The average, seven-day simple yield for the taxable money funds remained at 0.02% for the 10th consecutive week.
Overall, the combined total net assets of the 1,388 weekly reporting money funds increased $32.27 billion to $2.721 trillion in the period ended March 24, which followed an outflow of $19.50 billion to $2.688 trillion in the prior period.
