Prices of top-quality municipal bonds were stronger, traders said, with yields on some maturities falling by as much as six basis points as worries about Greece and China caused a flight to quality.
The bond and stock markets were volatile on Monday after a Greek vote rejected the terms of the country's latest bailout. Meanwhile, stocks in China closed higher, but only after the Chinese government promised action to halt the recent plunge in share prices.
Secondary Trading
The yield on the 10-year benchmark muni general obligation on Monday was down four to six basis points from 2.32% on Thursday, while the yield on the 30-year GO was off four to six basis points from 3.33%, according to a read of Municipal Market Data's triple-A scale.
Treasury prices were higher as well with the yield on the two-year Treasury note falling to 0.60% from 0.63% on Thursday, while the 10-year yield dropped to 2.33% from 2.39% and the 30-year yield decreased to 3.12% from 3.19%.
U.S. stock prices were lower with the Dow Jones Industrial Average off about 40 points, the Nasdaq fell around seven points and the S&P 500 was down nearly five points. European shares were also lower.
The 10-year muni to Treasury ratio was calculated on Thursday at 97.0% versus 96.0% on Wednesday, while the 30-year muni to Treasury ratio stood at 104.4% compared to 104.3%, according to MMD.
Primary Market
New supply for the week is estimated at $4.9 billion, consisting of $3.6 billion of negotiated deals and $1.3 billion of competitive sales.
Topping the calendar is the North Carolina Municipal Power Agency Number 1's $463 million of refunding bonds scheduled to be priced by Morgan Stanley on Thursday. 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 bonds are 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' $289 million of Series 2015A and taxable Series 2015B wastewater system revenue refunding bonds on Wednesday. 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.
Citigroup is expected to price on Thursday the Colorado Health facilities Authority's $206 million of Series 2015A health facilities revenue and revenue refunding bonds for the Evangelical Lutheran Samaritan Society project. The bonds are rated A-minus by Fitch.
Citi is also set to price the Massachusetts Port Authority's $179 million of Series 2015A non-AMT and Series 2015B AMT revenue bonds on Wednesday. The bonds are rated AA by S&P.
RBC Capital Markets is slated to price on Wednesday the Desert Sands Unified School District, Calif.'s $157 million of Series 2015 Election of 2014 general obligation bonds and Series 2015 GO refunding bonds.
Citi is expected to price the New York State Mortgage Agency's $152 million of homeowner mortgage revenue bonds consisting of Series 192 non-AMT, Series 193 non-AMT and Series 194 AMT 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.
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.
On Tuesday, Tampa, Fla., is set to sell two separate issues totaling around $127 million. The sales consist of $88.95 million of Series 2015 water and sewer systems refunding revenue bonds, rated Aa1 by Moody's and triple-A by S&P and Fitch, and $38.13 million of Series 2015 non-ad valorem refunding revenue bonds, rated Aa2 by Moody's, AA-plus by S&P and AA-minus by 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.
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.
Municipal Bond Funds See $1.2B Cash Outflow
Municipal bond funds reported an almost $1.2 billion outflow in the latest week, the largest cash withdrawal so far this year.
The weekly reporting funds saw $1.199 billion of outflows in the week ended July 1, the ninth straight week of cash withdrawals, after experiencing outflows of $105.755 million in the previous week, according to the latest Lipper data.
This brought to 12 out of 27 weeks this year the funds have suffered cash withdrawals.
The four-week moving average remained negative at $534.292 million after being in the red at $329.772 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 $898.989 million in the latest week, after seeing outflows of $24.416 million in the previous week.
Intermediate-term funds recorded outflows of $32.082 million after seeing outflows of $29.451 million in the prior week.
High-yield muni funds saw an outflow of $492.213 million in the latest reporting week, after seeing an inflow of $48.394 million the previous week.
However, exchange traded funds saw inflows of $4.966 million, after experiencing inflows of $41.989 million in the previous week.
Prior Week's Actively Traded Issues by Sector
Revenue bonds comprised 54.90% of new issuance in the week ended July 2, up from 54.90% in the previous week, according to Markit. General obligation bonds comprised 36.54% of total issuance, down from 36.54%, while taxable bonds made up 8.56%, up from 8.56%.
Some of the most actively traded issues last week were in Puerto Rico, New York and California, according to Markit.
In the revenue bond sector, the New York City Transitional Finance Authority's BARB 4s of 2044 were traded 60 times. In the GO bond sector, the Puerto Rico commonwealth GO 8s of 2035 were traded 171 times. And in the taxable bond sector, the Industry Public Facilities Authority, Calif., tax allocation revenue 5 3/4s of 2024 were traded 20 times, according to Markit.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 33,207 trades on Thursday on volume of $6.883 billion.
The most active bond, based on the number of trades, was the New Caney Independent School District, Texas' Series 2015 unlimited tax school building bond 4s of 2045, which traded 233 times at an average price of 100.118 with an average yield of 3.967%. The bonds were initially priced at 98.463 to yield 4.09%.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar increased $948.2 million to $10.04 billion on Monday. The total is comprised of $3.14 billion competitive sales and $6.91 billion of negotiated deals.
