Muni Prices Rise as Traders Eye $7B Calendar

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Prices of top-rated municipal bonds were higher at mid-session, as traders look to next week's $7.05 billion municipal sale calendar, which is topped off by almost $1 billion from New York City.

Secondary Market

The yield on the 10-year benchmark muni general obligation was down by as much as three basis points from 2.23% on Thursday, while the yield on the 30-year GO was off by as much as three basis points from 3.20%, according to a read of Municipal Market Data's triple-A scale.

Treasury prices were higher on Friday as the yield on the two-year Treasury note decreased to 0.61% from 0.63% on Thursday, while the 10-year yield dropped to 2.11% from 2.13% and the 30-year yield declined to 2.86% from 2.89%.

The 10-year muni to Treasury ratio was calculated on Thursday at 104.6% versus 105.4% on Wednesday, while the 30-year muni to Treasury ratio stood at 110.8% compared to 111.6%, according to MMD.

Primary Market

There are $5.29 billion of negotiated deals slated for next week and $1.76 billion of competitive sales scheduled, according to Ipreo.

The Big Apple will come to market with three separate offerings totaling $916.79 million. JPMorgan is expected to price the city's $616.79 million of Fiscal 2015 Series F, Subseries F-1 and Fiscal 2015 Series 1 general obligation bonds on Tuesday. The issue is rated Aa2 by Moody's Investors Service and AA by Standard & Poor's and Fitch Ratings.

In the competitive arena on Tuesday, the city will offer two separate sales of $195 million Fiscal 2015 Subseries F-3 taxable GOs and $105 million of  Fiscal 2015 Subseries F-2 taxable GOs.

Staying in the Empire State, Citi is slated to price the New York State Dormitory Authority's $620 million of bonds for the North Shore Long Island Jewish Health System on Wednesday. The DASNY issue is rated A2 by Moody's, A-minus by S&P and A by Fitch.

Moving South, Citi is also expected to price the District of Columbia's $534 million of GOs on Thursday. The bonds are rated Aa1 by Moody's and AA by S&P and Fitch.

In the competitive sector on Wednesday, the Maryland Department of Transportation is selling two separate bond issues totaling $488 million. The sales consist of $337.51 million of refunding Series 2015 consolidated transportation bonds and $150 million of Series 2015 second issue consolidated transportation bonds. Both issues are rated Aa1 by Moody's, triple-A by S&P and AA-plus by Fitch.

William Blair is set to price the Leander Independent School District, Texas' $300 million of Series A and B unlimited tax refunding bonds. The issue, backed by the Permanent School Fund guarantee program, is rated triple-A by S&P and AA-minus by Fitch.

Barclays Capital is slated to price Franklin County, Ohio's $281.59 million of Series 2015 hospital facilities revenue bonds for the Ohio Health Corp. on Wednesday. The bonds are rated Aa2 by Moody's, AA-plus by S&P and AA by Fitch.

Bank of America Merrill Lynch is set to price the Lower Colorado River Authority, Texas' $231 million of Series 2015 transmission contract refunding revenue bonds for the LCRA Transmission Services Corp. on Thursday. The bonds are rated A by Moody's and A-plus by S&P.

Also on the competitive slate for next Tuesday are the East Bay Municipal Utility District, Calif.'s $109 million of Series 2015B water system revenue green bonds, rated Aa1 by Moody's triple-A by S&P and AA-plus by Fitch; and the Broward County School District, Fla.'s $159 million of Series 2015 general obligation school bonds, rated Aa3 by Moody's, A-plus by S&P and AA-minus by Fitch.

Tax-Exempt Bond Funds Saw Outflows

For the fourth straight week, municipal bond funds saw outflows, bringing to seven out of 22 weeks in 2015 the funds have seen cash withdrawals.

The weekly reporting funds saw $205.255 million of outflows in the week ended May 27, after experiencing outflows of $91.046 million in the previous week, according to the latest Lipper data. So far this year, the funds have seen outflows in seven weeks.

The four-week moving average turned negative at 134.944 million after being in positive territory at $36.683 million in the prior week. A moving average is an analytical tool used to smooth out price changes by filtering out fluctuations.

Long-term muni bond funds also saw outflows, losing $120.475 million in the latest week, after experiencing outflows of $150.257 million in the previous week. High-yield muni funds recorded an outflow of $117.290 million in the latest reporting week, after seeing outflows of $132.141 million the previous week. It was also the fourth straight week of outflows for both the long-term and high-yield funds.

However, intermediate-term funds saw inflows of $20.142 million after seeing inflows of $93.520 million in the prior week. And exchange-traded funds had inflows of $42.357 million, after seeing inflows of $82.057 million in the previous week.

The Week's Most Actively Quoted Issues

Puerto Rico and California issues were among the most actively quoted in the week ended May 29, according to data released by Markit.

On the bid side, the Puerto Rico commonwealth GO 8s of 2035 were quoted by 14 unique dealers. On the ask side, the Riverside County Public Financing Authority revenue 4 1/8s of 2040 were quoted by 17 dealers. And among two-sided quotes, the Puerto Rico commonwealth GO 8s of 2035 were quoted by 11 dealers, Markit said.

The Week's Most Actively Traded Issues

Some of the most actively traded issues in the week ended May 29 were in Wisconsin, Puerto Rico, and Chicago names, according to Markit.

In the revenue bond sector, the Wisconsin Public Finance Authority 4 1/4s of 2041 were traded 68 times. In the GO bond sector, the Puerto Rico commonwealth 8s of 2035 were traded 73 times. And in the taxable bond sector, the Chicago Transportation Authority's sales and transfer tax receipt revenue 6.899s of 2040 were traded 23 times, according to Markit.

Bond Buyer Visible Supply

The Bond Buyer's 30-day visible supply calendar increased $2.50 billion to $13.99 billion on Friday. The total is comprised of $5.63 billion competitive sales and $8.36 billion of negotiated deals.

MSRB Previous Session's Activity

The Municipal Securities Rulemaking Board reported 44,134 trades on Thursday on volume of $12.970 billion.

The most active bond, based on the number of trades, was the Riverside County Public Financing Authority, Calif.'s Series 2015 capital facilities project lease revenue bonds 4 1/8s of 2040, which traded 177 times at an average price of 100.134 with an average yield of 4.094%. The bonds were initially priced at 97.308 to yield 4.30%.

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