Munis Mixed as Market Looks Ahead to Next Week

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Top-shelf municipal bonds were mixed in early activity, traders said, as the market digested the week's hefty supply and prepared for more volume next week.

Secondary Market

The yield on the 10-year benchmark muni general obligation dipped as much as one basis point from 1.76% on Thursday, while the yield on the 30-year slipped as much as one basis point from 2.60%, according to a read of Municipal Market Data's triple-A scale.

U.S. Treasuries were narrowly mixed on Friday. The yield on the two-year was unchanged from 0.88% on Thursday, the 10-year Treasury yield gained to 1.85% from 1.84% and the yield on the 30-year Treasury bond increased to 2.61% from 2.60%.

On Thursday, the 10-year muni to Treasury ratio was calculated at 95.6% compared to 96.3% on Wednesday, while the 30-year muni to Treasury ratio stood at 100.0% versus 100.6%, according to MMD.

MSRB: Previous Session's Activity

The Municipal Securities Rulemaking Board reported 40,798 trades on Thursday on volume of $18.08 billion.

Primary Market

A hefty amount of new issuance hit the screens this week.

Bank of America Merrill Lynch priced the New Jersey Transportation Trust Fund Authority's $2.74 billion of Series 2016A federal highway reimbursement revenue notes. The deal is rated A3 by Moody's Investors Service, A-plus by S&P Global Ratings and A-minus by Fitch Ratings.

Barclays Capital priced the California Health Facilities Financing Authority's $677.41 million of Series 2016A revenue bonds and Series 2016B refunding bonds for Cedars-Sinai Medical Center. The deal is rated Aa3 by Moody's and AA-minus by Fitch.

Citigroup priced the Grand Dam Authority, Okla.'s $491.04 million of Series 2016A revenue refunding bonds and Series 2016B taxable revenue refunding bonds. The deal is rated A1 by Moody's, AA-minus by S&P and A-plus by Fitch.

Bank of America Merrill Lynch priced a $419.42 million deal for the Piedmont Healthcare Inc. project in Georgia for three separate authorities: the Fulton County Development Authority, the Clarke County Hospital Authority and the Fayette County Hospital Authority. The deal is rated Aa3 by Moody's and AA-minus by S&P.

Wells Fargo Securities priced the Virginia Commonwealth Transportation Board's $316.93 million of Series 2016 federal transportation grant anticipation notes. The deal is rated Aa1 by Moody's and AA-plus by S&P and Fitch.

Citigroup priced the California Health Facilities Financing Authority's $282.04 million of Series 2016 revenue bonds for El Camino Hospital. The deal is rated A1 by Moody's and A-plus by S&P.

Piper Jaffray priced the Denver Convention Center Hotel Authority's $273.2 million of Series 2016 senior revenue refunding bonds. The deal is rated Baa2 by Moody's and BBB-minus by S&P.

Raymond James & Associates priced the Conroe Independent School District, Texas' $206.69 million of Series 2016A unlimited tax school building and refunding bonds. The deal, which is backed by the Permanent School Fund guarantee program is rated triple-A by Moody's and S&P.

Citigroup priced the Salem Hospital Facilities Authority, Ore.'s $197.76 million of Series 2016A revenue refunding bonds for Salem Health projects. The deal is rated A-plus by S&P and Fitch.

JPMorgan priced Raleigh, N.C.'s $193.21 million of Series 2016A combined enterprise system revenue bonds and Series 2016B combined enterprise system revenue refunding bonds. The deal is rated triple-A by Moody's, S&P and Fitch.

Morgan Stanley priced the Board of Regents of the University of Texas System's $185.28 million of Series 2016I revenue financing system refunding bonds. The deal is rated triple-A by Moody's, S&P and Fitch.

Morgan Stanley priced the New Hampshire Health and Education Facilities Authority's $147.995 million of Series 2016 revenue bonds for Elliot Hospital. The deal is rated Baa1 by Moody's and BBB by S&P.

BAML priced the Maryland Health and Higher Educational Facilities Authority's $120.06 million of Series 2016 revenue bonds for Lifebridge Health. The deal is rated A1 by Moody's and A-plus by S&P.

In the competitive arena, the Maryland Department of Transportation auctioned $627.53 million of bonds in two separate offerings. BAML won the $385 million of Series 2016 consolidated transportation bonds with a true interest cost of 2.31%. JPMorgan Securities won the $242.53 million of refunding Series 2016 consolidated transportation bonds with a TIC of 1.56%. Both deals are rated Aa1 by Moody's, AAA by S&P and AA-plus by Fitch.

The North Texas Municipal Water District sold $330.56 million of Series 2016 water system revenue refunding and improvement bonds. Bank of America Merrill Lynch won the deal with a true interest cost of 3.28%. The deal is rated Aa2 by Moody's and AAA by S&P.

The South Broward Hospital District, Fla., sold $150.93 million of Series 2016A hospital refunding revenue bonds for the South Broward Hospital District Obligated Group. JPMorgan won the deal with a TIC of 3.79%. The deal is rated Aa3 by Moody's and AA by S&P.

The California Public Works Board sold $147.39 million of Series 2016E lease revenue bonds for the Department of Corrections and Rehabilitation's RJ Donovan Correctional Facility's various buildings. BAML won the deal with a TIC of 2.77%. The deal is rated A1 by Moody's and A-plus by S&P and Fitch.

The city and county of Denver, Colo., sold $115 million of Series 2016 wastewater enterprise revenue bonds. BAML won the issue with a TIC of 3.14%. The deal is Aa1 by Moody's and triple-A by S&P and Fitch.

One deal that didn't hit traders' screens this week was Alaska's $2.35 billion of taxable pension obligation bonds. The issue was originally slated to be priced by Citigroup on Wednesday, but Gov. Bill Walker called it off due to a lack of support from the state legislature.

Bond Buyer Visible Supply

The Bond Buyer's 30-day visible supply calendar decreased $200 million to $12.76 billion on Friday. The total is comprised of $2.71 billion of competitive sales and $10.04 billion of negotiated deals.

Lipper: Muni Bond Funds See Inflows

Only one week after cash withdrawals brought a 54 week streak of inflows to an end, municipal bond funds reported that investor money returned, according to Lipper data released on Thursday.

The weekly reporters saw $334.917 million of inflows in the week ended Oct. 26, more than erasing outflows of $135.937 million in the previous week.

The four-week moving average remained positive at $167.723 million after being in the green at $250.058 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 experienced inflows again, gaining $216.109 million in the latest week after outflows of $553.787 million in the previous week. Intermediate-term funds had inflows of $90.083 million after inflows of $316.627 million in the prior week.

National funds had inflows of $337.143 million after outflows of $171.326 million in the previous week. High-yield muni funds reported inflows of $33.092 million in the latest reporting week, after outflows of $460.438 million the previous week.

Exchange traded funds saw inflows of $79.104 million, after outflows of $109.062 million in the previous week.

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