Prices of top-rated municipal bonds were weaker at mid-session, traders said, ahead of next week's $3.3 billion new issue slate.
According to Ipreo, volume for next week totals $3.26 billion, up from a revised total of $7.53 billion, according to Thomson Reuters. There are $2.83 billion of negotiated deals scheduled for next week and $432.5 million of competitive deals slated.
The municipal market has a half day of trading next Thursday ahead of the full close on Friday for the July 4th holiday.
Citi is expected to price the largest deal of the week on Tuesday, the Texas Transportation Commission's $800 million of state highway fund's first tier revenue refunding bonds. The issue is initially structured as serials running from 2017 through 2026. The bonds are rated triple-A by Moody's Investors Service and Standard & Poor's.
Morgan Stanley is set to price the Metropolitan Washington Airports Authority’s $350 million of Series 2015 B, C and D airport system revenue and refunding bonds on Tuesday. The issue is rated A1 by Moody’s and AA-minus by S&P and Fitch Ratings.
Morgan Stanley is also expected to price the state of Arizona’s $168 million of Series 2015 refunding certificates of participation on Tuesday. The COPs are rated Aa3 by Moody’s and AA-minus by S&P.
Jefferies is slated to price the Jets Stadium Finance Issuer 2015, LLC's $147 million of Series 2015 taxable weekly mode variable-rate demand notes on Tuesday. The notes are rated VMIG1 by Moody's and A1 by S&P.
Wells Fargo Securities is set to price Clark County, Nev.'s $102 million of revenue refunding bonds for the Las Vegas-McCarran International Airport on Tuesday. The bonds, initially structured as serials running from 2019 through 2027, are rated A1 by Moody's and A-plus by S&P.
The only competitive bond sale over $100 million will take place on Tuesday, when the North Dakota Public Finance Authority offers $125 million of Series 2015A revolving fund program bonds.
The last time the PFA competitively sold comparable bonds was on April 23, when Citi won $25.62 million of Series 2015B capital financing program bonds with a true interest cost of 3.33%.
Secondary Market
After one of the busiest trading days in two weeks, muni trading was quieting down on Friday, traders said.
The yield on the 10-year benchmark muni general obligation was up from one to three basis points from 2.32% on Thursday, while the yield on the 30-year GO was up from one to three basis points from 3.30%, according to a read of Municipal Market Data's triple-A scale.
Treasury prices were lower on Friday with the yield on the two-year Treasury note rising to 0.71% from 0.68% on Thursday, while the 10-year yield rose to 2.46% from 2.40% and the 30-year yield increased to 3.22% from 3.16%.
The 10-year muni to Treasury ratio was calculated on Thursday at 96.4% versus 101.1% on Wednesday, while the 30-year muni to Treasury ratio stood at 104.1% compared to 104.2%, according to MMD.
MSRB Previous Session's Activity
The market had a busy day on Thursday. The Municipal Securities Rulemaking Board reported 40,920 trades on volume of $13.745 billion. The most active bond, based on the number of trades, was the Missouri Southern State University Series 2015 auxiliary enterprise system revenue refunding 4s of 2038, which traded 173 times at an average price of 99.223 with an average yield of 4.05%. The bonds were initially priced at 99.246 to yield 4.05%.
Muni Bond Funds See Outflows for 8th Straight Week
For the eighth week in a row, municipal bond funds reported outflows, bringing to 11 out of 26 weeks this year the funds have suffered cash withdrawals.
The weekly reporting funds saw $105.755 million of outflows in the week ended June 24, after experiencing outflows of $420.844 million in the previous week, according to the latest Lipper data.
The four-week moving average remained negative at $329.772 million after being in the red at $354.647 million in the previous week. The moving average has been negative for three weeks in a row. A moving average is an analytical tool used to smooth out price changes by filtering out fluctuations.
Long-term muni bond funds also experienced outflows, losing $24.416 million in the latest week, after seeing outflows of $197.404 million in the previous week. It was the also the eighth week in a row long-term funds saw outflows.
Intermediate-term funds recorded outflows of $29.451 million after seeing outflows of $15.216 million in the prior week.
However, high-yield muni funds saw an inflow of $48.394 million in the latest reporting week, after seeing an outflow of $161.877 million the previous week.
And exchange traded funds saw inflows of $41.989 million, after experiencing inflows of $3.186 million in the previous week.
The Week's Most Actively Quoted Issues
Puerto Rico and New York issues were among the most actively quoted in the week ended June 26, according to data released by Markit.
On the bid side, the Puerto Rico commonwealth GO 8s of 2035 were quoted by 10 unique dealers. On the ask side, the New York City Transitional Finance Authority BARB 4s of 2044 were quoted by 19 dealers. And among two-sided quotes, the Puerto Rico commonwealth GO 8s of 2035 were quoted by 13 dealers, Markit said.
The Week's Most Actively Traded Issues
Some of the most actively traded issues in the week ended June 26 were in New York, Vermont and Mississippi names, according to Markit.
In the revenue bond sector, the New York City Transitional Finance Authority's BARB 4s of 2044 were traded 65 times. In the GO bond sector, the Vermont and State Agricultural College 4s of 2040 were traded 52 times. And in the taxable bond sector, the Mississippi Home Corp. single-family mortgage revenue 3.05s of 2034 were traded 13 times, according to Markit.
