Municipal bonds were stronger at mid-session, traders said, as yields on some top-quality maturities were as much as two basis points weaker.
On Monday, the yield on the 10-year benchmark muni general obligation was weakened by as much as one basis point from 2.03% on Friday, while the 30-year yield was as much as two basis points weaker from 2.97%, according to a read of Municipal Market Data's triple-A scale. Municipals closed steady on Friday after putting in a strong performance on Wednesday. The market was closed on Thursday for Thanksgiving.
Treasury yields were little changed on Monday. The two-year Treasury yield rose to 0.93% from 0.92% on Friday while the 10-year Treasury yield slipped to 2.21% from 2.22% and the 30-year yield dropped to 2.98% from 3.00%.
The 10-year muni to Treasury ratio was calculated on Friday at 91.2% from 91.0% on Wednesday, while the 30-year muni to Treasury ratio stood at 99.0% compared to 99.2%, according to MMD.
Primary Market
This week's $6.72 billion new issue calendar consists of $4.63 billion of negotiated deals and $2.09 billion of competitive sales.
Leading the competitive pack are two separate sales of general obligation bonds from Massachusetts on Tuesday totaling $550 million.
The Bay State will sell $400 million of consolidated loan of 2015 Series E and $150 million of consolidated loan of 2015 Series D bonds. Both issues are rated Aa1 by Moody's Investors Service and AA-plus by Standard & Poor's and Fitch Ratings.
RBC Capital Markets is set to price the Pennsylvania Turnpike Commission's $302 million of Series 2015B turnpike revenue bonds on Tuesday. The deal is rated A1 by Moody's and A-plus by Fitch.
Bank of America Merrill Lynch is slated to price the Dormitory Authority of the State of New York's $292 million of Series 2015B dormitory facilities revenue bonds for retail investors on Tuesday ahead of the institutional pricing on Wednesday. The DASNY bond are rated Aa3 by Moody's and A-plus by Fitch.
Morgan Stanley is expected to price the Kansas Department of Transportation's $400 million of Series 2015B highway revenue bonds on Wednesday. The deal is rated Aa2 by Moody's, triple-A by Standard & Poor's and AA-plus by Fitch.
Morgan Stanley is also set to price the Regents of the University of Michigan's $312 million of Series 2015 revenue bonds on Wednesday. The issue is rated triple-A by Moody's and S&P.
On Wednesday, the Maryland Department of Transportation will competitively sell $325 million of Series 2015, Third Issue, consolidated transportation bonds. The issue is rated Aa1 by Moody's, triple-A by S&P and AA-plus by Fitch.
The District of Columbia will competitively sell $250 million of fiscal year 2016 GO tax revenue anticipation notes on Wednesday. The TRANs are rated MIG-1 by Moody's, SP-1-plus by S&P and F-1-plus by Fitch.
In the short-term competitive arena on Wednesday, the New York Metropolitan Transportation Agency's $700 million of bond anticipation notes in six separate sales of $12 million each and one sale of $628 million. The BANs are rated MIG-1 by Moody's, SP-1-plus by S&P and F-1 by Fitch.
COFINA Responds to Reports of Puerto Rico Superbond
The senior creditors of the Puerto Rico Sales Tax Financing Corp. issued a statement on Monday about the a proposed superbond from the commonwealth of Puerto Rico.
"Recent press reports suggest that a proposed 'superbond' will rely on a 'consolidation of revenue streams.' While it is unclear if this consolidation would include the portion of the sales and use tax that is COFINA's property, it is important to note that the usage of COFINA revenues without our consent would violate Puerto Rican and U.S. Constitutions," COFINA said. "We await further details of this proposed 'superbond' and look forward to working constructively with all parties to reach a viable plan that places the Commonwealth on the right path to economic sustainability.
"As one of the very few secured creditors in the Puerto Rico debt structure, we expect that our property rights will be protected," the agency said. "COFINA has been the Puerto Rico debt issue that individuals and institutions both on and off-island have most trusted with their capital, retirement accounts and life savings. The Commonwealth must respect the rights of retirees and creditors."
Previous Week's Most Actively Traded Issues
Revenue bonds comprised 55.47% of new issuance in the week ended Nov. 27, down from 56.34% in the previous week, according to Markit. General obligation bonds comprised 37.38% of total issuance, up from 35.50%, while taxable bonds made up 7.15%, down from 8.16%.
Some of the most actively traded issues in the week ended Nov. 27 were in New York, Connecticut and California.
In the revenue bond sector, the New York City Municipal Water Finance Authority 5s of 2046 were traded 79 times. In the GO bond sector, the Connecticut 3 1/4s of 2029 were traded 35 times. And in the taxable bond sector, the city of Industry, Calif.'s 5 1/8s of 2051 were traded 85 times, Markit said.
Municipal Bond Funds See Inflows for 8th Straight Week
Municipal bond funds reported inflows for the eighth week in a row, according to Lipper data released on Friday.
Weekly reporting funds experienced $684.298 million of inflows in the week ended Nov. 25, after inflows of $384.566 million in the previous week, Lipper said.
The latest inflow brings to 27 out of 48 weeks this year that the funds have seen cash flowing in. Flows for the year to date remain positive, totaling over $3.5 billion.
The four-week moving average remained positive at $365.340 million after being in the green at $281.524 million in the previous week. A moving average is an analytical tool used to smooth out price changes by filtering out fluctuations.
Long-term muni bond funds also experienced inflows, gaining $582.103 million in the latest week, on top of inflows of $345.209 million in the previous week. Intermediate-term funds had inflows of $149.157 million after inflows of $47.681 million in the prior week.
National funds saw inflows of $588.182 million after inflows of $363.092 million in the prior week. High-yield muni funds reported inflows of $256.845 million in the latest reporting week, after an inflow of $127.042 million the previous week.
Exchange traded funds saw inflows of $108.446 million, after inflows of $121.760 million in the previous week.
Tax-Exempt Money Market Funds Post Outflows
Tax-exempt money market funds experienced outflows of $114.4 million, bringing total net assets to $245.79 billion in the period ended Nov. 24, according to The Money Fund Report, a service of iMoneyNet.com. This followed an inflow of $235.9 million to $245.79 billion in the previous week.
The average, seven-day simple yield for the 373 weekly reporting tax-exempt funds remained at 0.01% for the 134th straight week.
The total net assets of the 954 weekly reporting taxable money funds rose $2.26 billion to $2.506 trillion in the period ended Nov. 24, after an inflow of $2.63 billion to $2.504 trillion the previous week.
The average, seven-day simple yield for the taxable money funds remained at 0.02% for the 45th week in a row.
Overall, the combined total net assets of the 1,327 weekly reporting money funds increased $2.15 billion to $2.752 trillion in the period ended Nov. 24, which followed an inflow of $2.86 billion to $2.750 trillion the week before.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar rose $346.2 million to $10.59 billion on Monday. The total is comprised of $4.30 billion competitive sales and $6.29 billion of negotiated deals.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 6,429 trades on Friday on volume of $799 million. The MSRB reported 22,949 trades on Wednesday on volume of $4.12 million.
