Munis Steady as Attention Turns to Next Week

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After what was a busy week, municipal market participants will now start to shift their attention to next week's calendar.

Secondary Market

Top-shelf municipal bonds were steady on Friday morning, as the yield on the 10-year benchmark muni general obligation was flat at 1.72% on Thursday, while the yield on the 30-year was unchanged from 2.54%, according to a read of Municipal Market Data's triple-A scale.

U.S. Treasuries were mostly stronger on Friday morning. The yield on the two-year Treasury was flat at 0.82% from Thursday, the 10-year Treasury yield was lower at 1.73% from 1.75% and the yield on the 30-year Treasury bond decreased to 2.48% from 2.50%.

On Thursday, the 10-year muni to Treasury ratio was calculated at 98.6% compared to 98.9% on Wednesday, while the 30-year muni to Treasury ratio stood at 101.7% versus 101.8%, according to MMD.

MSRB: Previous Session's Activity

The Municipal Securities Rulemaking Board reported 40,918 trades on Thursday on volume of $16.895 billion.

Bond Buyer Visible Supply

The Bond Buyer's 30-day visible supply calendar increased $3.48 billion to $21.01 billion on Friday. The total is comprised of $3.59 billion of competitive sales and $17.42 billion of negotiated deals.

Lipper Reports Outflows

After 54 straight weeks of inflows, municipal bond funds reported investor money leaving the industry, according to Lipper data released on Thursday.

The weekly reporters saw $135.937 million of outflows in the week ended Oct. 19, after inflows of $147.312 million in the previous week, Lipper said.

The four-week moving average remained positive at $250.058 million after being in the green at $413.441 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 outflows, losing $553.787 million in the latest week after outflows of $55.575 million in the previous week. Intermediate-term funds had inflows of $316.627 million after inflows of $130.884 million in the prior week.

National funds had outflows of $171.326 million after inflows of $105.906 million in the previous week. High-yield muni funds reported outflows of $460.438 million in the latest reporting week, after outflows of $247.536 million the previous week.

Exchange traded funds saw outflows of $109.062 million, after inflows of $138.071 million in the previous week.

Primary Market

It was a busy week in the municipal market, as participants got to choose from over $14 billion of new issuance.

Wells Fargo and Morgan Stanley priced and repriced the state of Connecticut's $650 million of general obligation bonds and green bonds for institutions on Tuesday after a one-day retail order period. The deal is rated Aa3 by Moody's Investors Service and AA-minus by both S&P Global Ratings and Fitch Ratings.

Jefferies priced and then repriced the New York Metropolitan Transportation Authority's $642.555 million of revenue refunding bonds after a one-day retail order period. The deal is rated A1 by Moody's, AA-minus by S&P, A by Fitch and AA-plus by Kroll Bond Rating Agency.

Wells Fargo priced and then repriced the Texas Transportation Commission's $590.045 million of highway improvement GO bonds. The deal is rated triple-A by Moody's, S&P and Fitch.

Bank of America Merrill Lynch priced the University of Washington's $206.75 million of general revenue and refunding bonds. The deal is rated Aaa by Moody's and AA-plus by S&P.

Morgan Stanley priced the State Board of Regents of Utah University's $131.1 million of general revenue and refundings bonds. The deal is rated Aa1 by Moody's and AA-plus by S&P.

Morgan Stanley priced the Nebraska Public Power District's $113.28 million of general revenue bonds. The deal is rated A1 by Moody's and A-plus by S&P and Fitch.

BAML priced the Pennsylvania State Public School Building Authority's $568.49 million of project school lease revenue refunding bonds for the School District of Philadelphia. The deal is backed by the Pennsylvania State Aid Intercept program and rated A2 by Moody's and A-plus by Fitch. Assured Guaranty insures $438.185 million maturing 2025 through 2026 and 2030 through 2033. These Assured-backed bonds are rated AA by S&P, A2 by Moody's and AA-plus by Kroll.

California, the top issuer with $7.27 billion sold by the end of the third quarter, added to that total with three separate sales on Tuesday that totaled $1.65 billion.

The largest sale of $815.005 million was won by Citi with a true interest cost of 1.57%. $575.755 million of tax exempts were won by Morgan Stanley with a TIC of 2.87%. $255 million of taxables were won by Jefferies with a TIC of 0.89%. All three deals are rated Aa3 by Moody's, AA-minus by S&P and Fitch Ratings.

Wake County N.C., sold $162.215 million of GO refunding bonds, which were won by Wells with a TIC of 1.38%. The deal is rated triple-A by Moody's, S&P and Fitch.

The Suffolk County Water Authority, N.Y., sold two separate water system revenue bond deal totaling $174.775 million. The bigger sale, $118.335 million, was won by Wells Fargo with a TIC of 3.41%. The $56.44 million was won by BAML with a TIC of 2.72%. The deals are rated triple-A by S&P and Fitch.

Morgan Stanley priced Commonwealth Financing Authority, Pa.'s $758.755 million of federally taxable revenue bonds. The deal is rated A1 by Moody's and A-plus by S&P and Fitch.

Citi priced the New Jersey Healthcare Financing Authority's $679.145 million of revenue and refunding bonds for the Robert Wood Johnson Barnabas Health Obligated Group. There was also a corporate CUSIPs tranche. The tax-exempts are rated A1 by Moody's and A-plus by S&P.

Citi priced San Diego Community College District's $628.37 million of GO bonds and refunding bonds. The deal is rated Aaa by Moody's and AA-plus by S&P.

BAML also priced $301.61 million of revenue bonds for the University of Alabama at Birmingham's UAB Medicine Financing Authority. The deal is rated A1 by Moody's and AA-minus by S&P.

In the competitive sector, the state of Georgia auctioned $891.645 million of GO refunding bonds in two separate sales of $508.985 million and $382.66 million. BAML won the larger deal with a true interest cost of 1.74%. Citi won the other sale with a TIC of 1.65%. Both deals are rated triple-A by Moody's, S&P and Fitch.

Citi priced the state of Oregon Facilities Authority's $288.585 million of revenue bonds for the Legacy Health Project. The deal is rated A1 by Moody's and AA-minus by S&P.

Well Fargo priced and repriced the Norman, Okla., Regional Hospital Authority's $136.235 million of hospital revenue refunding bonds for the Norman Regional Hospital Authority Obligated Group. The deal is rated Baa1 by Moody's and BBB-plus by S&P.

In the competitive arena, the state of Virginia sold $184.86 million of general obligation and refunding bonds. Wells Fargo won the bidding with a true interest cost of 2.15%. The deal is rated triple-A by Moody's, S&P and Fitch.

Also, the Orange County, Calif., Sanitation District auctioned $109.875 million of revenue refunding certificate of anticipation notes, which were won by Bank of America Merrill Lynch with a TIC of 0.87%. The deal is rated triple-A by S&P and Fitch.

Monroe County, N.Y., auctioned $89.065 million of public improvement serial bonds, which were won by JPMorgan with a TIC of 2.48%. The bonds were priced to yield from 1.00% with a 3% coupon in 2017 to 3.36% with a 3.25% coupon in 2036. The deal is rated Baa1 by Moody's and A by S&P. Assured Guaranty insured $68.605 million in the 2020 through 2036 maturities, which are rated A2 by Moody's, AA by S&P and AA-plus by Kroll.

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