Munis Steady to Stronger Ahead of $9.98B Slate

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Municipal bonds were trading steady to stronger at mid-session, according to traders, who were looking ahead to next week's nearly $10 billion new issue calendar.

Ipreo estimates volume for next week at $9.98 billion, up from a revised $8.57 billion sold this week, according to updated data from Thomson Reuters.

The upcoming calendar is comprised of $7.42 billion of negotiated deals and $2.56 billion of competitive sales.

Secondary Market

The market saw a strong employment report for November. Non-farm payrolls rose 178,000 in November, above the 175,000 jobs gain predicted by economists surveyed by IFR Markets. The unemployment rate fell to 4.6%, a nine-year low. Economists polled by IFR Market had forecast the unemployment rate would remain unchanged at 4.9%.

The yield on the 10-year benchmark muni general obligation on Friday fell as much as two basis points from 2.58% on Thursday, while the yield on the 30-year was unchanged from 3.35%, according to an early read of Municipal Market Data's triple-A scale.

U.S. Treasuries strengthened on Friday. The yield on the two-year Treasury declined to 1.11% from 1.15% on Thursday, the 10-year Treasury dropped to 2.39% from 2.44%, while the yield on the 30-year Treasury bond decreased to 3.05% from 3.10%.

On Thursday, the 10-year muni to Treasury ratio was calculated at 105.6% compared to 106.9% on Wednesday while the 30-year muni to Treasury ratio stood at 108.1% versus 108.2%, according to MMD.

MSRB: Previous Session's Activity

The Municipal Securities Rulemaking Board reported 62,459 trades on Thursday on volume of $20.87 billion.

Week's Most Actively Traded Issues

Some of the most actively traded issues by type in the week ended Dec. 2 were from California and New Jersey, according to Markit.

In the GO bond sector, the California 5s of 2034 were traded 28 times. In the revenue bond sector, the New Jersey Economic Development Authority 4s of 2041 were traded 99 times. And in the taxable bond sector, the California 7.6s of 2040 were traded 20 times.

Week's Most Actively Quoted Issues

Illinois and New York issues were among the most actively quoted bonds in the week ended Dec. 2, according to Markit.

On the bid side, the Illinois taxable 6.63 of 2035 were quoted by 37 unique dealers. On the ask side, the Illinois taxable 5.1s of 2033 were quoted by 66 unique dealers. And among two-sided quotes, the New York TSASC revenue 5.125s of 2042 were quoted by 17 unique dealers.

Week's Primary Market

The week was choc-a-block with new deals.

Morgan Stanley priced Chicago O'Hare International Airport's $1.11 billion of general airport senior lien revenue bonds in four series. The deal is rated A by S&P Global Ratings and Fitch Ratings except for the Series 2016F 2035-2047 maturities, which are insured by Build America Mutual and rated AA by S&P.

Barclays Capital priced the New Jersey Economic Development Authority's $970.7 million deal. The bonds are rated A3 by Moody's Investors Service, BBB-plus by S&P and A-minus by Fitch.

Barclays also priced the District of Columbia's $590.32 million of general obligation bonds. The deal is rated Aa1 by Moody's and AA by S&P and Fitch.

Morgan Stanley priced the Alabama Economic Settlement Authority's $629.58 million of Series 2016 A&B BP taxable and tax-exempt settlement revenue bonds. The deal is rated A2 by Moody's and A-minus by S&P.

Raymond James & Associates priced the New York City Municipal Water Finance Authority's $415.65 million of Fiscal 2017 Series CC water and sewer system second general resolution revenue bonds. The deal is rated Aa1 by Moody's and AA-plus by S&P and Fitch.

Wells Fargo Securities priced the Board of Regents of the University of Texas System's $306.93 million of Series 2016J revenue financing system bonds. The deal is rated triple-A by Moody's, S&P and Fitch.

JPMorgan Securities priced the Katy Independent School District, Texas' $161.38 million refunding. The deal is backed by the Permanent School Fund guarantee program and rated triple-A by Moody's and S&P.

Wells Fargo priced Montgomery County, Texas' $121 million of Series 2016A unlimited tax road bonds and limited tax refunding bonds. The deal is rated triple-A by Moody's and AA-plus by Fitch.

Piper Jaffray priced Portland Community College, Ore.'s $116.73 million of Series 2016 general obligation refunding bonds. The deal is rated Aa1 by Moody's and AA by S&P.

In the competitive arena, Massachusetts sold $600 million of consolidated loan of 2016 general obligation bonds in three separate offerings.

Bank of America Merrill Lynch won the $300 million of Series J GOs with a true interest cost of 4.11%. Citigroup won the $150 million of Series I GOs with a TIC of 3.67%. Goldman Sachs won the $150 million of Series H GOs with a TIC of 2.61%. All three sales are rated Aa1 by Moody's and AA-plus by S&P and Fitch.

Montgomery County, Md., competitively sold $340 million of consolidated public improvement general obligation bonds of 2016 Series A. Citi won the Series A GOs with a TIC of 3.28%. The deal is rated triple-A by Moody's, S&P and Fitch.

The city and county of San Francisco's Public Utility Commission sold $259.35 million of Series 2016C taxable water revenue green bonds. Wells Fargo Securities won the deal with a TIC of 3.90%. The deal is rated Aa3 by Moody's and AA-minus by S&P.

Orange County, Fla., sold two separate competitive issues totaling $296.57 million. Bank of America Merrill Lynch won the $206.74 million of Series 2016B tourist development tax refunding revenue bonds with a TIC of 4.04%. BAML also won the $89.83 million of Series 2016A tourist development tax refunding revenue bonds with a TIC of 4.05%. Both sales are rated Aa3 by Moody's, AA-minus by S&P and AA by Fitch.

The state of 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%. The deal is rated triple-A by Moody's Investors Service and S&P Global Ratings.

Bond Buyer Visible Supply

The Bond Buyer's 30-day visible supply calendar increased $2.97 billion to $15.25 billion on Friday. The total is comprised of $3.75 billion of competitive sales and $11.50 billion of negotiated deals.

Lipper: Muni Bond Funds See Outflows

Municipal bond funds again reported outflows as investors pulled cash out of the market, according to Lipper data released late Thursday.

The weekly reporters saw $2.081 billion of outflows in the week ended Nov. 30, after outflows of $2.232 billion in the previous week.

The four-week moving average remained in the red at negative $1.815 billion after being negative $1.376 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 $1.238 billion in the latest week after outflows of $1.467 billion in the previous week. Intermediate-term funds had outflows of $523.811 million after outflows of $500.210 million in the prior week.

National funds had outflows of $1.745 billion after outflows of $1.849 billion in the previous week. High-yield muni funds reported outflows of $714.491 million in the latest reporting week, after outflows of $929.623 million the previous week.

Exchange traded funds saw inflows of $6.013 million, after outflows of $77.721 million in the previous week.

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