Traders of municipal bonds were taking a breather on Friday as they look ahead to next week's spate of new supply, topped off by big deals from Far West issuers.
Primary Market
Leading off the calendar are three separate competitive sales from California totaling $1.1 billion. The sales, slated for next Tuesday, consist of $592.7 million of tax-exempt various purpose general obligation refunding bonds, Bid Group C; $403.5 million of tax-exempt various purpose GO refunding bonds, Bid Group B; and $105.36 million of taxable various purpose GO, Bid Group A.
The bonds are rated Aa3 by Moody's Investors Service and A-plus by Standard & Poor's and Fitch Ratings.
Also slated for next week, is the $887.85 million negotiated deal for Washington's Energy Northwest. JPMorgan is slated to price the tax-exempt and taxable bonds in six series, consisting of $101.32 million of Series 2015-A Project 1 electric revenue refunding bonds; $314.63 million of Series 2014-A Columbia generating station electric revenue and refunding bonds; $74.29 million of Series 2014-A revenue refunding bonds; $25.43 million of Series 2015B Project 1 taxable electric revenue refunding bonds; $332.96 million of Series 2015-B Columbia generating station taxable electric revenue and refunding bonds; and $39.23 million of Series 2015-B taxable revenue refunding bonds.
On Thursday, Loop Capital Markets priced the New York City Transitional Finance Authority's $650 million of Fiscal 2015 Subseries E-1 future tax secured subordinate bonds after a holding a two-day order period for retail investors. The bonds were rated Aa1 by Moody's Investors Service and triple-A by Standard & Poor's and Fitch Ratings.
Additionally on Thursday, the TFA competitively sold $200 million of Fiscal 2015 Series E Subseries E-2 future tax secured taxable subordinate bonds. The deal was won by Stifel with a true interest cost of 3.0201%. The taxables were also rated Aa1 by Moody's and triple-A by S&P and Fitch.
The TFA said it received about $140 million of retail orders and around $606 million of priority orders from institutional investors for the $492 million of bonds left to sell. The TFA also said it received 10 bids for the sale of the $200 million of taxable new money bonds.
On April 22, the TFA will offer $190 million of tax-exempt new money variable-rate demand bonds, bringing the total sale amount to $1.04 billion.
Secondary Market
Treasury prices were lower on Friday as the yield on the two-year Treasury note rose to 0.50% from 0.48% on Thursday, while the 10-year yield increased to 1.90% from 1.89% and the 30-year yield increased to 2.58% from 2.56%.
Prices of top-quality munis closed mixed on Thursday. The yield on the 10-year benchmark muni general obligation was unchanged from 1.94% on Wednesday, while the yield on the 30-year GO rose by one basis point to 2.83% from 2.82%, according to the final read of Municipal Market Data's triple-A scale.
The 10-year muni to Treasury ratio was calculated on Thursday at 103.3% versus 102.2% on Wednesday, while the 30-year muni to Treasury ratio stood at 110.7% compared to 110.3%.
Tax-Exempt Bond Funds See Outflow
Municipal bond funds which report weekly, posted $486.312 million of outflows in the week ended April 15, after experiencing outflows of $32.810 million in the week ended April 8, according to the latest Lipper data.
The four-week moving average turned negative at $59.509 million in the latest week after being positive at $95.488 million in the prior week. A moving average is an analytical tool used to smooth out price changes by filtering out fluctuations.
Long-term muni bond funds saw inflows, gaining $237.634 million in the latest week, after experiencing inflows of $227.106 million in the previous week.
High-yield muni funds recorded an inflow of $49.576 million in the latest reporting week, after seeing inflows of $129.963 million in the previous week. Exchange-traded funds had inflows of $126.797 million, after recording inflows of $96.832 million in the previous week.
In contrast, long-term municipal bond mutual funds posted $187 million of outflows in the week ended April 8, according to the Investment Company Institute. ICI reported inflows into long-term funds of $96 million in the previous week.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar increased $1.602 billion to $11.832 billion on Friday. The total is comprised of $3.859 billion competitive sales and $7.973 billion of negotiated deals. MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 44,283 trades on Thursday on volume of $14.410 billion.
The most active bond, based on the number of trades, was the Chicago Series 2012B taxable GO project and refunding 5.432s of 2042, which traded 231 times at an average price of 87.817 with an average yield of 6.388%. The bonds were initially priced at par to yield 5.432%.
