Munis Strengthen Ahead of Next Week's $3.6B Calendar

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Top-shelf municipal bond were stronger at mid-session, according to traders who were looking ahead to the three-day holiday weekend. The market will be closed on Monday in observance of Presidents' Day.

Traders will be looking at a smaller calendar as Ipreo estimates new issue volume at $3.61 billion, down from a revised total of $5.27 billion this week, according to updated data from Thomson Reuters.

Next week's slate is composed of $2.08 billion of negotiated deals and $1.53 billion of competitive sales.

Secondary Market

The 10-year benchmark muni general obligation yield fell two to four basis points from 2.41% on Thursday, while the yield on the 30-year GO fell one to three basis points from 3.14%, according to a read of Municipal Market Data's triple-A scale.

Treasuries were stronger on Friday. The yield on the two-year Treasury dipped to 1.19% from 1.20% on Thursday, while the 10-year Treasury dropped to 2.42% from 2.44%, and the yield on the 30-year Treasury bond decreased to 3.02% from 3.04%.

On Thursday, the 10-year muni to Treasury ratio was calculated at 98.4% compared to 97.2% on Wednesday, while the 30-year muni to Treasury ratio stood at 103.0%, versus 102.6%, according to MMD.

MSRB: Previous Session's Activity

The Municipal Securities Rulemaking Board reported 50,916 trades on Thursday on volume of $13.22 billion.

Week's Most Actively Traded Issues

Some of the most actively traded issues by type in the week ended Feb. 17 were from New York, Utah and California, according to Markit.

In the GO bond sector, the New York City zeros of 2042 were traded 30 times. In the revenue bond sector, the Salt Lake City Airport, Utah, 5s of 2042 were traded 34 times. And in the taxable bond sector, the California 7.5s of 2034 were traded 17 times.

Week's Most Actively Quoted Issues

Puerto Rico, New York and Illinois names were among the most actively quoted bonds in the week ended Feb. 17, according to Markit.

On the bid side, the Puerto Rico Commonwealth GO 5s of 2041 were quoted by 53 unique dealers. On the ask side, the New York City GO 5s of 2028 were quoted by 306 unique dealers. And among two-sided quotes, the Illinois taxable 5.1s of 2033 were quoted by 29 unique dealers.

Primary Market

There weren't a lot of deals on the new issue calendar this week and most of those offerings were jammed into Tuesday and Wednesday.

Bank of America Merrill Lynch priced the San Francisco Bay Area Toll Authority, Calif.'s $559.015 million of Series 2017A, B, C & D toll bridge term- and index-rate revenue bonds. The deal consisted of $125.225 million of Series A term rate bonds, $125.225 million of Series B term rate bonds, $151.715 million of Series C term rate bonds and $156.85 million of Series D index rate bonds.

The bonds are rated Aa3 by Moody's Investors Service and AA by S&P Global Ratings and Fitch Ratings.

BAML also priced the Delaware River Joint Toll Bridge Commission of Pennsylvania and New Jersey's $434.97 million of Series 2017 bridge system revenue bonds. The deal is rated A1 by Moody's, A by S&P and A-plus by Fitch.

And BAML priced the New York Metropolitan Transportation Authority's $309.8 million of Series 2017A dedicated tax fund green bonds which are climate bond certified. The deal is rated AA by S&P and Fitch.

Additionally, BAML priced the Connecticut Housing Finance Authority's $228.23 million of housing mortgage finance program bonds. The deal consisted of $83.55 million of Series 2017 Subseries A1 bonds, not subject to the alternative minimum tax, $41.46 million of Series 2017 Subseries A2 AMT bonds, $87.74 million of Series 2017 Subseries A4 non-AMT bonds and $15.5 million of Series 2017 Subseries A5 non-AMT bonds. The deal is rated triple-A by Moody's and S&P.

Goldman Sachs priced the Dormitory of the State of New York's $190.6 million of Series 2017 revenue bonds for Columbia University. The deal consisted of $150 million of Series 2017A bonds and $40.6 million of Series 2017B bonds. The deal is rated triple-A by Moody's and S&P.

Morgan Stanley priced the West Valley-Mission Community College District, Calif.'s $125.95 million of general obligation refunding bonds. The deals consisted of $10.42 million of Series 2017A GOs and $115.53 million of Series 2017B GO 2019 crossover bonds. The Series 2017A bonds are rated triple-A by Moody's and S&P. The Series 2017B bonds are rated Aaa by Moody's and AA-plus by S&P until after the crossover date of Aug. 1, 2019, when the S&P rating on the Series 2017B bonds will reflect the district's then-current long-term debt rating.

In the competitive arena, the Las Vegas Valley Water District, Nev., sold $152.77 million of GOs in two separate offerings. Citigroup won the $129.33 million of Series 2017A limited tax GO water refunding bonds additionally secured by pledged revenue with a true interest cost of 3.37%. Morgan Stanley won the $23.44 million of Series 2017B limited tax GO water refunding bonds additionally secured by Southern Nevada Water Authority pledged revenue with a TIC of 2.64%. The deals are rated Aa1 by Moody's and AA by S&P.

The Long Beach Unified School District, Calif., sold $450 million of general obligation bonds in two separate parts. Citigroup won the $300 million of election of 2016 Series A unlimited tax GOs with a TIC of 3.74%. Morgan Stanley won the $150 million of election of 2016 Series E unlimited tax GOs smaller deal with a TIC of 3.92%. The deals are rated Aa2 by Moody's and triple-A by Fitch.

Wake County, N.C., sold two competitive deals totaling $113.96 million of Go public improvement bonds. Wells Fargo won both deals; the larger deal of $80.42 million won with a TIC of 2.85%, while the $33.7 million was won with a TIC of 2.81%. Both deals are rated triple-A by Moody's, S&P and Fitch.

Bond Buyer Visible Supply

The Bond Buyer's 30-day visible supply calendar increased $1.98 billion to $8.50 billion on Friday. The total is comprised of $3.86 billion of competitive sales and $4.64 billion of negotiated deals.

Lipper: Muni Bond Funds Report Inflows

Municipal bond funds again attracted inflows, according to Lipper data released late Thursday. The weekly reporters saw $480.072 million of inflows in the week ended Feb. 15, after inflows of $304.200 million in the previous week.

The four-week moving average remained in the green at positive $201.325 million, after being positive at $209.241 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 also had inflows, gaining $464.295 million in the latest week after gaining $274.984 million in the previous week. Intermediate-term funds had outflows of $8.176 million after inflows of $60.887 million in the prior week.

National funds had inflows of $495.227 million after inflows of $293.215 million in the previous week. High-yield muni funds reported inflows of $481.705 million in the latest reporting week, after inflows of $286.427 million the previous week.

Exchange traded funds saw inflows of $12.103 million, after outflows of $62.055 million in the previous week.

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