Prices of top-rated municipal bonds were flat to a touch better at mid-session, traders said, as yields were unchanged to down by as much as one basis point.
In the primary, traders saw New York City's general obligation bonds priced for institutions and the Michigan State Building Authority's revenue and revenue refunding bond deal come to market.
Secondary Market
The yield on the 10-year benchmark muni general obligation was flat from 2.23% on Wednesday, while the yield on the 30-year GO was down by as much as one basis point from 3.16%, according to a read of Municipal Market Data's triple-A scale.
Treasury prices were mixed on Thursday, with the yield on the two-year Treasury note rising to 0.73% from 0.70% on Wednesday, while the 10-year yield was flat from 2.27% and the 30-year yield decreased to 2.96% from 2.98%.
The 10-year muni to Treasury ratio was calculated on Wednesday at 97.8% versus 99.2% on Tuesday, while the 30-year muni to Treasury ratio stood at 105.6% compared to 106.0%, according to MMD.
Primary Market
Siebert Brandford Shank priced New York City's $750 million of Fiscal 2016 Series A&B GOs for institutions on Thursday after holding a two-day retail order period.
The $645.43 million of Series A bonds were priced to yield from 1.02% with 5% and 3% coupons in a split 2018 maturity to 3.13% with a 5% coupon in 2030. The 2017 maturity was offered as a sealed bid.
The $104.565 million of Series B bonds were priced for to yield from 1.02% with 4% and 5% coupons in a split 2018 maturity to 3.56% with a 3.5% coupon in 2035. The 2016 and 2017 maturities were offered as sealed bids.
For retail, the $640.2 million of Series A bonds were priced to yield from 1% with 5% and 3% coupons in a split 2018 maturity to 2.70% with a 5% coupon in 2026; a 2017 maturity was offered as a sealed bid. No retails orders were taken in the 2027 through 2030 maturities. The $109.8 million of Series B bonds were priced to yield from 1% with a 4% coupon in 2018 to 3.54% with a 3.5% coupon in 2035; the 2016 and 2017 maturities were offered as sealed bids.
The Big Apple's bonds were rated Aa2 by Moody's Investors Service and AA by Standard & Poor's and Fitch Ratings.
Also on Thursday, JPMorgan priced the Michigan State Building Authority's $989.95 million of Series 2015 I revenue and revenue refunding bonds.
The bonds were priced to yield from 1.36% with a 5% coupon in 2019 to 3.56% with a 5% coupon in 2035. A term bond in 2038 was priced as 5s to yield 3.67%. Another term bond in 2040 was priced as 4s to yield 4.10%. Term bonds in 2045 and 2050 were priced as 5s to yield 3.81% and 3.96%, respectively.
The issue is rated Aa2 by Moody's, A-plus by S&P and AA-minus by Fitch.
Since 1995, the Michigan SBA has issued roughly $8.94 billion of debt. The years of 2003 and 2005 saw the most issuance with $1.05 billion and $1.07 billion, respectively. The authority did not come to market at all in 2010, 2012 and 2014.
In the competitive arena, Columbus, Ohio, sold nearly $319 million of bonds in three separate offerings.
Bank of America Merrill Lynch won the $230.66 million of Series 2015A unlimited tax various purpose bonds with a true interest cost of 2.79%. The issue was priced to yield from 0.70% with a 2% coupon in 2017 to 3.35% with a 4% coupon in 2035.
Robert W. Baird won the $74.69 million of Series 2015B limited tax various purpose bonds with a TIC of 2.97%. No pricing information was immediately available.
PNC Capital Markets won the $13.64 million of Series 2015C taxable limited tax various purpose bonds with a TIC of 2.54%. No pricing information was immediately available.
All three issues were rated triple-A by Moody's, S&P and Fitch.
Tax-Exempt Money Market Funds Post Outflows
Tax-exempt money market funds experienced outflows of $1.41 billion, bringing total net assets to $245.42 billion in the period ended July 27, according to The Money Fund Report, a service of iMoneyNet.com. This followed an inflow of $346.9 million to $246.83 billion in the previous week.
The average, seven-day simple yield for the 384 weekly reporting tax-exempt funds remained at 0.01% for a 117th straight week.
The total net assets of the 968 weekly reporting taxable money funds fell $5.99 billion to $2.422 trillion in the period ended July 28, after experiencing an inflow of $29.44 billion to $2.428 trillion in the prior week.
The average, seven-day simple yield for the taxable money funds remained at 0.02% for the 28th consecutive week.
Overall, the combined total net assets of the 1,379 weekly reporting money funds decreased $7.40 billion to $2.668 trillion in the period ended July 28, which followed an inflow of $29.78 billion to $2.675 trillion the week before.
MMA: Default Count Slows in July
There has been only one municipal bond default disclosed so far in July compared to seven first-time defaults reported in the same period last year, according to a report from Municipal Market Analytics.
Only one land-secured project has defaulted this month. This stands in contrast to July 2014 when three retirement projects, a hospital, a charter school, a jail, and an industrial development bond all went into default, MMA said.
For the year-to-date, there were 30 defaults, amounting to $1.2 billion, versus 35 defaults, totaling $3.2 billion, in 2014.
"Of course, these totals are apt to shift dramatically in the next few months should Puerto Rico default on a debt service payment, (specifically the Public Finance Corp. or Government Development Bank, although note that there are 217 governmental-related Puerto Rico CUSIPs with a payment date on Aug. 1, including 172 COFINA CUSIPs)," MMA wrote in the report.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 38,824 trades on Wednesday on volume of $8.031 billion.
The most active bond, based on the number of trades, was the Lehigh County General Purpose Authority, Pa., Series 2015A hospital revenue 4 1/4s of 2045, which traded 157 times at an average price of 99.562, an average yield of 4.276%. The bonds were initially priced at 97.352 to yield 4.41%.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar increased $3.00 billion to $13.71 billion on Wednesday. The total is comprised of $1.01 billion competitive sales and $12.70 billion of negotiated deals.
