Muni Yields Drift Lower Ahead of Dead Upcoming Week

bb122115markit-01.jpg
bb122115markit-02.jpg
bb122115week.jpg

As of midday on Friday, munis were stronger as yields on some maturities were as many as three basis points lower, according to traders.

Volume for next week looks bleak, as an estimated $73 million will be hitting the primary market, according to Ipreo, which would be way down from $1.98 billion that priced this week, according to Thomson Reuters.

The upcoming muni calendar will make this week's deal flow look like Niagara Falls compared to the Sahara Desert. There is only one negotiated deal on the Dalcomp calendar – and it's for under $40 million – while there are only a handful of competitive sales up for bid, none of which are over $5 million

Secondary Market

Municipals ended stronger on Thursday and continued that thus far on Friday. The yield on the 10-year benchmark muni general obligation was as down as many as two basis points from 1.95% on Thursday, while the 30-year yield was anywhere from one to three basis points lower from 2.84% on Thursday, according to a read of Municipal Market Data's triple-A scale.

U.S. Treasury bonds were stronger on Friday as the yield on the two-year yield fell to 0.95% from 0.99% on Thursday, while the 10-year Treasury was lower to 2.19% from 2.24% and the 30-year Treasury yield decreased to 2.91% from 2.94%.

The 10-year muni to Treasury ratio was calculated on Thursday at 84.7% compared to 86.5% on Wednesday, while the 30-year muni to Treasury ratio stood at 96.8% compared to 96.2%, according to MMD.

The Week's Most Actively Quoted Issues

New York & New Jersey, Texas, and California were some of the most actively quoted names in the week ended Dec. 18, according to data released by Markit.

On the bid side, the New York & New Jersey Port Authority taxable 4.81s of 2065 were quoted by 13 unique dealers. On the ask side, the North Texas Tollway Authority revenue 5s of 2040 were quoted by 17 unique dealers. And among two-sided quotes, the state of California taxable 7.55s of 2039 were quoted by 17 dealers, Markit said.

The Week's Most Actively Traded Issues

Some of the most actively traded issues by type in the week ended Dec. 18 were in New York and New Jersey, according to Markit.

In the revenue bond sector, the New Jersey Healthcare Facility Finance Authority 5s of 2046 were traded 80 times. In the GO bond sector, the Nassau County N.Y. 2s of 2016 were traded 52 times. And in the taxable bond sector, The Port Authority of New York and New Jersey 4.81s of 2065 were traded 18 times, Markit said.

The Week's Primary Market

Jacksonville, Fla., competitively sold $200.27 million of transportation refunding revenue bonds, as Wells Fargo Securities won the bidding war with a true interest cost of 3.2%. The deal was rated A1 by Moody's Investors Service and AA-minus by Standard & Poor's and Fitch Ratings.

Citigroup priced the New York Transportation Development Corp.'s $167.23 million of Series 2015 special facility revenue refunding bonds for the Terminal One Group Association Project. The issue, which was subject to alternative minimum tax, was rated Baa1 by Moody's and A-minus by Fitch.

RBC Capital Markets priced the Spring Independent School District, Texas' $139.68 million of Series 2015 unlimited tax refunding bonds. The deal was wrapped by Permanent School Fund guarantee program and was rated triple-A by both Moody's and S&P.

Barclays Capital priced the Utah Housing Corp.'s $114.58 million of Series 2015D single-family mortgage bonds, consisting of $52.65 million of D-1 Class III bonds subject to the alternative minimum tax and $61.94 million of Series D-2 Class III non-AMT bonds. The deal was rated Aa3 by Moody's and AA-minus by S&P and Fitch Ratings.

RBC Capital Markets priced the Ohio Water Development Authority's $105.13 million of Series 2015B water pollution control loan fund revenue refunding bonds. The bonds were rated triple-A by Moody's and S&P.

Municipal Bond Funds See Inflows for 11 Straight Weeks

Municipal bond funds reported inflows for the 11th straight week, according to Lipper data released on Thursday.

Weekly reporting funds experienced $303.495 million of inflows in the week ended Dec. 16, after inflows of $741.968 million in the previous week.

The latest inflow brings to 30 out of 51 weeks this year that the funds have seen cash flowing in. Flows for the year to date remain positive, totaling over $4.5 billion.

The four-week moving average remained positive at $523.453 million after being in the green at $543.721 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 $200.533 million in the latest week, on top of inflows of $249.348 million in the previous week. Intermediate-term funds had inflows of $155.613 million after inflows of $357.572 million in the prior week.

National funds saw inflows of $273.837 million after inflows of $734.578 million in the prior week. High-yield muni funds reported inflows of $26.694 million in the latest reporting week, after an inflow of $203.227 million the previous week.

Exchange traded funds saw outflows of $4.642 million, after inflows of $121.669 million in the previous week.

MSRB Previous Session's Activity

The Municipal Securities Rulemaking Board reported 39,269 trades on Thursday on volume of $8.907 billion.

Bond Buyer Visible Supply

The Bond Buyer's 30-day visible supply calendar fell $524.4 million to $2.46 billion on Friday. The total is comprised of $836.5 million competitive sales and $1.63 billion of negotiated deals.

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