Muni Traders Eye Yields; Last Few Deals for Week Slated

bb120916mun.jpg
bb120916mun.jpg

Municipal bond traders are keeping an eagle eye on yields as the last of the week's big deals are slated to hit the market on Thursday.

Municipal yields have been falling since Friday, Dec. 2. Since then the 10-year muni yields have dropped 30 basis points and the 30-year muni yields have declined by 28 basis points.

Secondary Market

U.S. Treasuries were weaker on Thursday. The yield on the two-year Treasury rose to 1.11% from 1.10% on Wednesday, the 10-year Treasury gained to 2.39% from 2.34%, while the yield on the 30-year Treasury bond increased to 3.08% from 3.02%.

Top-rated municipal bonds closed significantly stronger on Wednesday. The yield on the 10-year benchmark muni general obligation was 15 basis points lower at 2.28% from 2.43% on Tuesday, while the yield on the 30-year decreased 16 basis points to 3.07% from 3.23%, according to the final read of Municipal Market Data's triple-A scale.

On Wednesday, the 10-year muni to Treasury ratio was calculated at 97.2% compared to 101.6% on Tuesday while the 30-year muni to Treasury ratio stood at 101.4% versus 104.9%, according to MMD.

MSRB: Previous Session's Activity

The Municipal Securities Rulemaking Board reported 60,723 trades on Wednesday on volume of $20.32 billion.

Primary Market

JPMorgan Securities is set to price the New York City Housing Development Corp.'s $542.91 million of multi-family housing revenue bonds.

The sustainable neighborhood bonds consist of Series 2016 I-1, I-2, and index floating rate Series 2016 J-1 and J-2.

The deal is rated Aa2 by Moody's Investors Service and AA-plus by S&P Global Ratings.

Since 2006, the NYC HDC has sold roughly $13.1 billion of securities, with the largest issuance occurring in 2014, when it sold $1.9 billion. Its lowest year of bonding was in 2011, when it issued $305 million. The corporation has sold more than $1 billion in each of the past five years and eight times since 2006.

Goldman Sachs is expected to price the Akron, Bath and Copley Joint Township Hospital District, Ohio's $345.71 million of Series 2016 hospital facilities refunding and improvement revenue bonds for the Summa Health Obligated Group.

The deal is rated Baa1 by Moody's and A-minus by Fitch Ratings.

Morgan Stanley is set to price the Metropolitan St. Louis Sewer District, Mo.'s $150 million of Series 2016C wastewater system improvement revenue bonds.

Siebert Cisneros Shank is expected to price the Love Field Airport Modernization Corp., Texas' $117.27 million of Series 2017 general airport revenue bonds. The issuer is a not-for-profit acting on behalf of the city of Dallas. The deal is rated A2 by Moody's and A by S&P and Fitch.

In the competitive arena, Los Angeles is set to sell $144.69 million of taxable Series 2016A general obligation refunding bonds. The deal is rated Aa2 by Moody's.

The city last competitively sold comparable bonds on April 10, 2012, when Barclays Capital won $225.85 million of Series 2012A GO refunding bonds with a true interest cost of 2.22%.

Bond Buyer Visible Supply

The Bond Buyer's 30-day visible supply calendar decreased $2.71 billion to $10.13 billion on Thursday. The total is comprised of $1.92 billion of competitive sales and $8.21 billion of negotiated deals.

Tax-Exempt Money Market Fund Inflows

Tax-exempt money market funds experienced inflows of $870.9 million, bringing total net assets to $130.96 billion in the week ended Dec. 5, according to The Money Fund Report, a service of iMoneyNet.com. This followed an inflow of $54.8 million to $130.09 billion in the previous week.

The average, seven-day simple yield for the 237 weekly reporting tax-exempt funds was unchanged at 0.16% from previous week.

The total net assets of the 866 weekly reporting taxable money funds increased $4.58 billion to $2.572 trillion in the week ended Dec. 6, after an inflow of $20.59 billion to $2.568 trillion the week before.

The average, seven-day simple yield for the taxable money funds was steady at 0.15% from the previous week.

Overall, the combined total net assets of the 1,103 weekly reporting money funds rose $5.45 billion to $2.703 trillion in the week ended Dec. 6 after inflows of $20.64 billion to $2.698 trillion in the prior week.

For reprint and licensing requests for this article, click here.
MORE FROM BOND BUYER