Munis Little Changed Ahead of Next Week's $5.95B Calendar

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Top-quality municipal bonds were steady to slightly weaker at mid-session, traders said as they went about finishing up their work ahead of the weekend, looking ahead to next week's calendar.

Total volume for the upcoming week is estimated by Ipreo at $5.95 billion, down from $6.72 billion sold this week, according to revised data from Thomson Reuters. Next week's calendar is made up of $5.03 billion of negotiated deals and $910.5 million of competitive sales.

Secondary Market

The yield on the 10-year benchmark muni general obligation rose by as much as one basis from 1.45% on Thursday, while the yield on the 30-year muni was unchanged from 2.15%, according to a read of Municipal Market Data's triple-A scale.

U.S. Treasuries were mixed on Friday. The yield on the two-year Treasury rose to 0.70% from 0.69% on Thursday as the 10-year Treasury yield was unchanged from 1.56% and the yield on the 30-year Treasury bond decreased to 2.28% from 2.30%.

On Thursday, the 10-year muni to Treasury ratio was calculated at 92.9% compared to 91.9% on Wednesday, while the 30-year muni to Treasury ratio stood at 93.5% versus 92.4%, according to MMD.

MSRB: Previous Session's Activity

The Municipal Securities Rulemaking Board reported 35,285 trades on Thursday on volume of $14.35 billion.

Week's Most Actively Traded Issues

Some of the most actively traded issues by type in the week ended July 22 were from Connecticut, New York and California issuers, according to Markit.

In the GO bond sector, the Greenwich, Conn., 2s of 2017 were traded 22 times. In the revenue bond sector, the NYC MTA 5s of 2056 were traded 39 times. And in the taxable bond sector, the California 7.6s of 2040 were traded 33 times.

Week's Most Actively Quoted Issues

California issues were among the most actively quoted names in the week ended July 22, according to Markit.

On the bid side, the California taxable 7.6s of 2040 were quoted by 15 unique dealers. On the ask side, the California taxable 7.6s of 2040 were quoted by 17 unique dealers. And among two-sided quotes, the California taxable 7.6s of 2040 were quoted by 10 unique dealers.

Primary Market

Wells Fargo Securities priced and restructured the New York Metropolitan Transportation Authority's significantly upsized $863.86 million of Series 2016C transportation revenue and transportation revenue refunding bonds for institutions on Wednesday after holding a one-day retail order period.

The $838.31 deal priced in the morning and added a refunding component for institutional investors; in the afternoon a second component was added at the repricing.

"We increased the transaction to $863,860,000 by adding $329,660,000 in refunding, taking advantage of a strong retail order period, strong institutional demand in the longer end of the loan and significant interest in shorter term mandatory put bonds," said an MTA spokesman.

The deal is rated A1 by Moody's Investors Service, AA-minus by S&P Global Ratings, A by Fitch Ratings and AA-plus by Kroll Bond Rating Agency.

Morgan Stanley priced the State Building Authority of Michigan's $666.13 million of Series 2016 revenue and revenue refunding bonds. The deal is rated Aa2 by Moody's, A-plus by S&P and AA-minus by Fitch.

Proceeds from the sale will be used to refinance existing debt for over $150 million in present value savings and fund $108 million in new building projects approved by the Michigan Legislature through its capital outlay process.

Investor interest in the issue was particularly strong, with demand for the bonds outpacing supply by nearly four times, state officials said.

"Michigan continues to lead the nation in economic expansion," Gov. Rick Snyder said in a press release. "It is rewarding to see the hard work we've done to balance the budget and grow the economy translate into real savings that benefit Michiganders."

About 90 different investors participated in the sale, and the true interest cost on the transaction was 3.05% for the 35-year bond issue, the lowest long-term issue in the SBA's 37-year history, state officials said.

"At the SBA, we continuously monitor opportunities to contribute to the state's overall financial picture and with this transaction we provide over $16 million in savings to the state over the next 10 years," SBA Executive Director Deborah Roberts said. "Of utmost importance to us is to construct facilities for the state and educational institutions at the lowest cost."

Morgan Stanley priced Aurora, Colo.'s $437.96 million of Series 2016 first lien water refunding green bonds. The deal is rated AA-plus by S&P and Fitch.

Goldman Sachs priced the New York City Trust for Cultural Resources' $280.56 million of Series 2016-One-E revenue bonds for the Museum of Modern Art. The MoMA bonds are rated Aa2 by Moody's and AA by S&P.

Bank of America Merrill Lynch priced the Port of Seattle, Wash.'s $251.51 million of first and intermediate lien revenue refunding bonds in four series, consisting of Series 2016A first lien revenue refunding bonds not subject to the alternative minimum tax, Series 2016B AMT first lien revenue refunding bonds, Series 2016C taxable first lien revenue refunding bonds, and Series 2016 non-AMT intermediate lien revenue refunding bonds. The deal is rated Aa2 by Moody's, AA-minus by S&P and AA by Fitch.

JPMorgan Securities priced the North Harris County Regional Water Authority, Texas' $246.91 million of Series 2016 senior lien revenue and refunding bonds. The deal is rated AA-minus by S&P and A-plus by Fitch.

Morgan Stanley priced the Louisiana Citizens Property Insurance Corp.'s $217.42 million tax-exempt and taxable bonds. The deal is rated A1 by Moody's and A by S&P.

JPMorgan priced Baltimore County, Md.'s $150 million of Series 2016 taxable general obligation bonds. The deal is rated triple-A by Moody's, S&P and Fitch.

BAML priced the Ohio Water Development Authority's $135 million of Series 2016 drinking water assistance fund revenue bonds. The deal is rated triple-A by Moody's, S&P and Fitch.

Citigroup priced the Lone Star College System of Harris, Montgomery and San Jacinto Counties, Texas' $129.33 million of Series 2016 limited tax GO refunding bonds. The deal is rated triple-A by S&P.

Wells Fargo Securities priced the Pennsylvania Higher Educational Facilities Authority's $117.22 million of Series 2016 revenue refunding bonds for Drexel University. The deal is rated A3 by Moody's and A by S&P.

Citi priced Travis County, Texas' $116.12 million of limited tax refunding bonds. The deal is rated triple-A by Moody's and S&P.

BAML priced the Las Vegas Convention and Visitors Authority, Nev.'s $100.71 million of Series 2016C revenue refunding bonds. The deal is rated A1 by Moody's and A-plus by S&P.

In the competitive arena, the Massachusetts Bay Transportation Authority competitively sold two separate sales tax and assessment refinancing deals totaling about $337 million.

JPMorgan won the $218 million of Series 2016A senior sales tax capital appreciation bonds with a true interest cost of 2.40%. Morgan Stanley won the $119 of Series 2016A assessment bonds with a TIC of 1.76%.

The sale was the first competitive offering by the agency in 21 years. The MBTA said the bonds were sold as refunding bonds to lower its debt service costs and achieve both present value and cash flow savings.

The senior sales tax CABs deal saved the MBTA $79 million on a cash flow basis and $53 million on a present value basis while the assessment bonds transaction produced cash flow savings of $84 million and present value savings of $57 million.

The assessment bonds are rated Aa1 by Moody's and AAA by S&P and the senior sales tax bonds are rated Aa2 by Moody's and AA-plus by S&P.

Columbus, Ohio, sold five separate issues totaling over $480 million. The deals are rated triple-A by Moody's, S&P and Fitch.

Morgan Stanley won the $372.32 million of Series 2016A various purpose unlimited tax bonds with a true interest cost of 2.34%. Hutchinson Shockey won the $81.35 million of Series 2016B various purpose limited tax bonds with a TIC of 2.03%; PNC Capital Markets won the $13.36 million of Series 2016D taxable various purpose limited tax bonds with a TIC of 1.86%; PNC won the $2.58 million of Series 2016C taxable various purpose unlimited tax bonds with a TIC of 2.12%; and PNC also won the $11.8 million of various purpose limited tax notes with an effective rate of 0.43%.

Bond Buyer Visible Supply

The Bond Buyer's 30-day visible supply calendar decreased $181.8 million to $10.94 billion on Friday. The total is comprised of $3.90 billion of competitive sales and $7.04 billion of negotiated deals.

Lipper: Muni Bond Funds See Inflows

For the 42nd straight week, municipal bond funds reported inflows, according to Lipper data released on Thursday.

The weekly reporters saw $1.014 billion of inflows in the week ended July 20, after inflows of $1.222 billion in the previous week, Lipper said.

The four-week moving average remained positive at $922.446 billion after being in the green at $1.030 billion 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 experienced inflows, gaining $671.101 million in the latest week after inflows of $762.527 million in the previous week. Intermediate-term funds had inflows of $254.709 million after inflows of $186.246 million in the prior week.

National funds had inflows of $882.469 million on top of inflows of $995.331 million in the previous week. High-yield muni funds reported inflows of $281.660 million in the latest reporting week, after inflows of $335.893 million the previous week.

Exchange traded funds saw inflows of $192.991 million, after inflows of $124.531 million in the previous week.

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