Munis Mixed as Supply Dries Up Ahead of Holiday Weekend

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Top-rated municipal bonds were steady to weaker at mid-session, traders said, as the primary market was slowly winding down as the long Memorial Day holiday weekend loomed.

The yield on 10-year benchmark muni general obligation was as much as one basis point stronger from 1.66% on Wednesday, while the 30-year muni yield was steady from 2.45%, according to a read of Municipal Market Data's triple-A scale.

U.S. Treasuries were stronger in Thursday trading. The yield on the two-year Treasury dropped to 0.88% from 0.91% on Wednesday, while the 10-year Treasury yield declined to 1.84% from 1.86% and the yield on the 30-year Treasury bond decreased to 2.64% from 2.67%.

Long-term muni yields have been on a bumpy 10-year downward trend overall. In May of 2006, the yield on the 30-year muni was calculated at 4.58%. On May 17, the 30-year muni yield stood at its all-time low of 2.39%, down from the previous lows set back in 2012.

The 10-year muni to Treasury ratio was calculated at 88.8% on Wednesday compared to 88.8% on Tuesday, while the 30-year muni to Treasury ratio stood at 91.8% versus 92.7%, according to MMD.

MSRB Previous Session's Activity

The Municipal Securities Rulemaking Board reported 40,604 trades on Wednesday on volume of $13.33 billion.

Primary Market

RBC Capital Markets received the official award on the Massachusetts Educational Financing Authority's $340 million of Series 2016 Issue J education loan revenue bonds, subject to the alternative minimum tax.

The issue was priced to yield from 1.53% with a 4% coupon in 2018 to 2.75% with a 5% coupon in 2024; a 2033 term bond was priced as 3 1/2s to yield 3.625%.

The deal is rated AA by S&P Global Ratings and A by Fitch Ratings.

RBC also received the written award on the South San Francisco Unified School District, San Mateo County, Calif.'s $129 million of Series 2016C general obligation bonds, dedicated unlimited ad valorem property tax bonds.

The issue was priced to yield from 0.60% with a 2% coupon in 2017 to 2.49% with a 4% coupon in 2033; a 2037 term was priced as 4s to yield 2.70% and a 2041 term was priced as 3 1/4s to yield 3.15%.

The bond are rated Aa1 by Moody's Investors Service and triple-A by Fitch.

JPMorgan Securities received the official award on the New Jersey Healthcare Facilities Finance Authority's $117.77 million of Series 2016A refunding bonds for the Inspira Health Obligated Group.

The issue was priced to yield from 0.83% with a 4% coupon in 2017 to 3.35% with a 3.25% coupon in 2036; a 2041 term was priced as 4s to yield 3.31% and a 2046 term was priced as 5s to yield 3%.

The deal is rated A2 by Moody's and A by Fitch.

Bond Buyer Visible Supply

The Bond Buyer's 30-day visible supply calendar decreased $4.05 billion to $8.88 billion on Thursday. The total is comprised of $6.48 billion of competitive sales and $2.40 billion of negotiated deals.

Tax-Exempt Money Market Funds See Outflows

Tax-exempt money market funds experienced outflows of $987.8 million, bringing total net assets to $211.40 billion in the week ended May 23, according to The Money Fund Report, a service of iMoneyNet.com. This followed an outflow of $2.55 billion to $212.39 billion in the previous week.

The average, seven-day simple yield for the 296 weekly reporting tax-exempt funds was unchanged at 0.06%.

The total net assets of the 893 weekly reporting taxable money funds increased $25.30 billion to $2.503 trillion in the week ended May 24, after an outflow of $16.29 billion to $2.477 trillion the week before.

The average, seven-day simple yield for the taxable money funds was 0.10%, down from 0.11% in the prior week.

Overall, the combined total net assets of the 1,189 weekly reporting money funds increased $24.31 billion to $2.714 trillion in the period ended May 24, which followed an outflow of $18.84 billion to $2.690 trillion.

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