Municipal bond traders are seeing the last issuance of the week come to market on Thursday, as muni yields continue to fall by as many as three basis points on some maturities.
Secondary Market
The 10-year benchmark muni general obligation yield was between one and three basis points lower from 2.45% on Wednesday, while the yield on the 30-year GO was as many as two basis points lower from 3.21%, according to a read of Municipal Market Data's triple-A scale.
U.S. Treasuries were weaker on Thursday morning. The yield on the two-year Treasury was up to 1.32% from 1.31% on Wednesday, while the 10-year Treasury yield rose to 2.52% from 2.50%, and the yield on the 30-year Treasury bond increased to 3.14% from 3.11%.
On Wednesday, the 10-year muni to Treasury ratio was calculated at 97.9%, compared with 96.0% on Tuesday, while the 30-year muni to Treasury ratio stood at 103.5%, versus 102.5%, according to MMD.
Primary Market
The last issuance of the week is set to hit screens on Thursday, with the bulk of it coming via competitive deals.
The Empire State Development Corporation sold five separate deals that totaled roughly $1.84 billion of New York State Urban Development Corporation State personal income tax revenue general purpose bonds, with three deals of tax-exempt bonds and two deals of taxable bonds.
The $514.38 million of series 2017B, Group B taxable bonds were won by JPMorgan with a true interest cost of 2.19%. No other pricing information was immediately available.
The $512.89 million of Series 2017B, Group A taxable bonds were won by Morgan Stanley with a TIC of 3.09%. No other pricing information was immediately available.
On the tax-exempt side, the $327.245 million of Series 2017A, Group A bonds were won by JPM with a TIC of 2.37%. No other pricing information was immediately available.
The $243.2 million of Series 2017A, Group B bonds were won by Jefferies with a TIC of 3.41%. No other pricing information was immediately available.
The $242.355 million of Series 2017A, Group C bonds were won by Morgan Stanley with a TIC of 3.95%. No other pricing information was immediately available.
All five deals are rated AAA by S&P Global Ratings and AA-plus by Fitch Ratings.
Since 2007, the ESDC has sold about $17.69 billion of bonds, with the most issuance coming in 2013 when it offered $3.28 billion. The corporation did not come to market at all in 2012 and has sold more than $1 billion of bonds all but three years in that time. With the competitive sales on Tuesday, the ESDC has now sold more this year than in any of the past three years.
Boulder Valley School District No. RE-2, Colo. sold roughly $285 million of general obligation and GO refunding bonds in two separate deals. The $190 million of Go bonds were won by Morgan Stanley with a TIC of 3.96%. No other pricing information was immediately available.
The $94.88 million of GO refunding bonds were also won by Morgan Stanley, with a TIC of 2.44%. No other pricing information was immediately available. Both deals are rated Aa1 by Moody's Investors Service and AA-plus by S&P and Fitch.
In the negotiated arena, JPMorgan priced Monroe County Industrial Development Corp., N.Y.'s $238.19 million of revenue bonds for the University of Rochester Project. The $145.5 million of Series 2017A were priced to yield from 1.00% with a 5% coupon in 2018 to 3.46% with a 5% coupon in 2037. A term bond in 2042 was priced to yield 3.95% with a 3.875% coupon and a term bond in 2047 was priced to yield 3.97% with a 3.875% coupon.
The $92.685 million of Series 2017B bonds were priced to yield from 1.00% with a 5% coupon in 2018 to 3.86% with a 3.75% coupon in 2037. A term bond in 2039 was priced to yield 3.88% with a 3.75% coupon. The deal is rated Aa3 by Moody's and AA-minus by S&P and Fitch.
JPMorgan also priced the Washington Health Care Facilities Authority's $114.81 million of revenue bonds for the Seattle Children's Hospital. The bonds were priced to yield from 1.09% with a 3% coupon in 2018 to 3.31% with a 5% coupon in 2030. A term bond in 2042 was priced to yield 3.75% with a 5% coupon and a term bond in 2047 was priced to yield 3.77% with a 5% coupon. The deal is rated Aa2 by Moody's and AA by Fitch.
MSRB: Previous Session's Activity
The Municipal Securities Rulemaking Board reported 41,204 trades on Wednesday on volume of $11.531 billion.
Tax-Exempt Money Market Fund Inflows
Tax-exempt money market funds experienced inflows of $90.9 million, bringing total net assets to $131.08 billion in the week ended March 13, according to The Money Fund Report, a service of iMoneyNet.com. This followed an inflow of $560.5 billion to $130.99 billion in the previous week.
The average, seven-day simple yield for the 232 weekly reporting tax-exempt funds was unchanged from 0.20% in the previous week.
The total net assets of the 860 weekly reporting taxable money funds decreased $4.95 billion to $2.521 trillion in the week ended March 14, after an inflow of $5.37 billion to $2.526 trillion the week before.
The average, seven-day simple yield for the taxable money funds increased to 0.29% from 0.27% in the prior week.
Overall, the combined total net assets of the 1,092 weekly reporting money funds fell $4.86 billion to $2.652 trillion in the week ended March 14, after inflows of $5.93 billion to $2.657 trillion in the prior week.
