Prices of top-quality municipal bonds were stronger at mid-session, traders said, with yields on some maturities falling by as much as three basis points.
Municipal bond market traders are looking ahead to next week's $5 billion new issue calendar, which is led off by the Kansas Development Finance Authority's $1 billion deal.
Secondary Market
The yield on the 10-year benchmark muni general obligation was off as much as one basis point from 2.24% on Thursday, while the yield on the 30-year GO was down as much as three basis points from 3.12%, according to a read of Municipal Market Data's triple-A scale.
Treasury prices were mostly higher on Friday, with the yield on the two-year Treasury note rising to 0.72% from 0.70% on Thursday, while the 10-year yield fell to 2.18% from 2.23% and the 30-year yield decreased to 2.85% from 2.91%.
The 10-year muni to Treasury ratio was calculated on Thursday at 100.4% versus 98.9% on Wednesday, while the 30-year muni to Treasury ratio stood at 107.3% compared to 106.5%, according to MMD.
Primary Market
The new issue slate lightens up quite a bit next week with only about a handful of negotiated deals over $100 million and no competitive bond sales over $75 million.
Bonds slated for next week total $5.03 billion, according to Ipreo, consisting of $4.52 billion of negotiated deals and $509.8 million of competitive sales.
Topping the slate is a $1 billion offering from the Kansas Development Finance Authority. The deal, to be by priced by Bank of America Merrill Lynch, consists of Series 2015H taxable revenue bonds. The issue is rated Aa3 by Moody's Investors Service and AA-minus by Standard & Poor's.
Wells Fargo Securities is scheduled to price Charlotte, N.C.'s $475 million of water and sewer revenue bonds. The issue is rated triple-A by Moody's, S&P and Fitch Ratings.
Goldman, Sachs is set to price the Los Angeles County Public Works Authority, Calif.'s lease revenue refunding bonds. The issue, which consists of Series B tax-exempts and Series C taxables, is rated A1 by Moody's, AA by S&P and A-plus by Fitch.
Wells Fargo is also scheduled to price MEAG's $183.76 million of Georgia Power Project J revenue bonds. The bonds are rated A2 by Moody's and A-plus by S&P and Fitch.
Morgan Stanley will price the state of Michigan's $129.31 million of Series 2015A tax-exempt general obligation environmental program refunding bonds. The issue is rated Aa1 by Moody's and AA-minus by S&P and Fitch.
Wells is also expected to price the Santa Clara University, Calif.'s $110 million of bonds. The issue is rated Aa3 by Moody's.
And RBC Capital Markets is slated to price the Oakland Redevelopment Successor Agency, Calif.'s subordinated tax allocation refunding bonds. The issue consists of Series 2015 tax-exempts and Series 2015 taxables.
The Week's Most Actively Quoted Issues
California, Puerto Rico and New Jersey were some of the most actively quoted names in the week ended Aug. 7, according to data released by Markit.
On the bid side, The Puerto Rico Commonwealth Aqueduct & Sewer Authority Revenue 5.25s of 2042 were quoted by 12 unique dealers. On the ask side, the New Jersey Transportation Trust Fund Authority 5.25s of 2036 were quoted by 15 dealers. And among two-sided quotes, the California 7.55s of 2039 were quoted by 14 dealers, Markit said.
The Week's Most Actively Traded Issues
Some of the most actively traded issues in the week ended Aug. 7 were in Colorado, New York and Connecticut, according to Markit.
In the revenue bond sector, the Colorado Regional Transportation District 4s of 2040 were traded 56 times. In the GO bond sector, the New York City 5s of 2026 were traded 37 times. And in the taxable bond sector, The Connecticut 2.5s of 2020 were traded 17 times, Markit said.
Remaining in the Red: Municipal Bond Funds Again See Outflows
Municipal bond funds saw a second week of redemptions, according to the latest Lipper data. Funds which report weekly saw $308.245 million of outflows in the week ended Aug. 5, after experiencing outflows of $73.372 million in the previous week, Lipper reported.
The latest outflow brings to 16 out of 32 weeks this year that the funds have seen redemptions. However, for the year to date, inflows are still in the green, totaling $2.953 billion.
The four-week moving average remained negative at $71.365 million after being in the red at $70.731 million in the previous week. The moving average has now been negative for 11 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 $208.019 million in the latest week, after seeing outflows of $10.511 million in the previous week. Intermediate-term funds saw outflows of $1.413 million after seeing outflows of $14.428 million in the prior week.
Exchange traded funds, saw inflows of $40.478 million, after experiencing inflows of $101.548 million in the previous week.
But high-yield muni funds saw outflows of $57.808 million in the latest reporting week, after seeing an outflow of $10.152 million the previous week.
In the past 14 weeks, high-yield funds have seen outflows 11 times totaling $1.775 billion and inflows three times totaling $78.785 million.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 41,377 trades on Thursday on volume of $9.433 billion.
The most active bond, based on the number of trades, was the Louisiana Public Facilities Authority Series 2015 revenue refunding bonds for the 19th Judicial District Court Building project 4 1/2s of 2047, which traded 150 times at an average price of 99.311, an average yield of 4.52%. The bonds were initially priced at 96.711 to yield 4.70%.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar was up $1.21 billion to $7.81 billion on Friday. The total is comprised of $2.48 billion competitive sales and $5.33 billion of negotiated deals.
