Top-rated municipal bonds were weaker at mid-session, traders said, as the last of the week's new issue supply came to market on Thursday.
Munis followed Treasuries lower ahead of Friday's U.S. employment situation report.
Secondary Market
The yield on the 10-year benchmark muni general obligation rose three to five basis points from 2.52% on Wednesday, while the yield on the 30-year increased four to six basis points from 3.26%, according to a read of Municipal Market Data's triple-A scale.
While the yield on the 30-year muni has risen over 70 basis points in the last month, it is by no means a precedent-setting event.
"Is this the longest four week increase in history? No," MMD Senior Market Strategist Daniel Berger wrote in a Thursday market comment. "In June 2013, during the infamous 'Taper Tantrum,' this maturity increased more than 90 basis points. Prior to that, this maturity range increased more than 100 basis points in October 2008, when the full impact of the Lehman Brothers collapse was felt in the muni market."
U.S. Treasuries were weaker on Thursday. The yield on the two-year Treasury rose to 1.15% from 1.11% on Wednesday, the 10-year Treasury gained to 2.45% from 2.37%, while the yield on the 30-year Treasury bond increased to 3.12% from 3.01%.
On Wednesday, the 10-year muni to Treasury ratio was calculated at 106.9% compared to 106.5% on Tuesday while the 30-year muni to Treasury ratio stood at 108.2% versus 107.2%, according to MMD.
S&P Municipal Bond Index Has Worst Month Since '08
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"Key drivers have been a potential tax rate changes could impact tax-exempt municipal bonds," said J.R. Rieger, managing director and global head of fixed income at SPDJI, who added that "Retail sentiment is sensitive to losses and as a result funds are flowing out of bond funds putting pressure on the muni market."
MSRB: Previous Session's Activity
The Municipal Securities Rulemaking Board reported 56,840 trades on Wednesday on volume of $15.11 billion.
Primary Market
Piper Jaffray priced Portland Community College, Ore.'s $116.73 million of Series 2016 general obligation refunding bonds.
The issue was priced to yield 0.94% with a 2% coupon in 2017 and from 1.88% with 2% and 5% coupons in a split 2020 maturity to 3.16% with a 5% coupon in 2029. The deal is rated Aa1 by Moody's Investors Service and AA by S&P Global Ratings.
Wells Fargo Securities priced Montgomery County, Texas' $121 million of Series 2016A unlimited tax road bonds and limited tax refunding bonds.
The $73.32 million of road bonds were priced to yield from 1.33% with a 4% coupon in 2018 to 3.58% with a 5% coupon in 2037; a 2039 maturity was priced as 5s to yield 3.62% and a 2042 maturity was priced as 4s to yield 4.16%.
The $47.68 million of refunding bonds were priced to yield 1.02% with a 3% coupon in 2017 and 1.33% with a 4% coupon in 2018 and from 2.14% with a 5% coupon in 2021 to 3.63% with a 3.375% coupon in 2030.
The deal is rated triple-A by Moody's and AA-plus by Fitch Ratings.
In the competitive arena, Texas sold $157.14 million of Series 2016 general obligation college student loan bonds, subject to the alternative minimum tax.
Citigroup won the deal with a true interest cost of 4.10%. Pricing information was not immediately available. The deal is rated triple-A by Moody's and S&P.
Ziegler is set to price the Maryland Health and Higher Educational Facilities Authority's $269.75 million of Series 2016A revenue bonds for Adventist Healthcare. The deal is rated Baa3 by Moody's.
Since 2006, the Maryland HHEFA has sold roughly $10.5 billion of securities, with the largest issuance occurring in 2008, when it sold $1.9 billion. Its lightest year was 2014, when the authority issued $424 million.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar decreased $4.99 billion to $12.28 billion on Thursday. The total is comprised of $4.01 billion of competitive sales and $8.27 billion of negotiated deals.
Tax-Exempt Money Market Fund Inflows
Tax-exempt money market funds experienced inflows of $54.8 million, bringing total net assets to $130.09 billion in the week ended Nov. 28, according to The Money Fund Report, a service of iMoneyNet.com. This followed an inflow of $447.0 million to $130.04 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 867 weekly reporting taxable money funds increased $20.59 billion to $2.568 trillion in the week ended Nov. 29, after an inflow of $23.02 billion to $2.547 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 1,104 weekly reporting money funds rose $20.64 billion to $2.698 trillion in the week ended Nov. 29 after inflows of $23.46 billion to $2.677 trillion in the prior week.
