Munis Strengthen as Last of Week's Big Deals Sell

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Top-rated municipal bonds were stronger at mid-session, according to traders, as the last of this week's large sales were coming to market.

Secondary Market

The 10-year benchmark muni general obligation yield fell two to four basis points from 2.19% on Wednesday, while the yield on the 30-year GO dropped two to four basis points from 2.92%, according to a read of Municipal Market Data's triple-A scale.

U.S. Treasuries were stronger on Thursday. The yield on the two-year Treasury dropped to 1.16% from 1.18% on Wednesday, while the 10-year Treasury yield decreased to 2.31% from 2.37%, and the yield on the 30-year Treasury bond declined to 2.91% from 2.96%.

On Wednesday, the 10-year muni to Treasury ratio was calculated at 92.5% compared to 93.3% on Tuesday, while the 30-year muni to Treasury ratio stood at 98.8%, versus 100.0%, according to MMD.

MSRB: Previous Session's Activity

The Municipal Securities Rulemaking Board reported 43,691 trades on Wednesday on volume of $14.90 billion.

Primary Market

Goldman Sachs priced an upsized $961.97 million deal for the Triborough Bridge and Tunnel Authority. The deal for the N.Y. MTA's bridges and tunnels, was originally sized at $665 million.

The $264.22 million of Series 2017A general revenue bonds were priced to yield 1.81% with a 4% coupon in 2022, as 5s to yield from 2.13% in 2024 to 2.52% in 2027, at par to yield 3% in 2030, to yield from 2.96% with a 5% coupon in 2033 to 3.16% with a 5% coupon in 2038, as 5s to yield 3.21% in 2042, and as 5s to yield 3.26% in 2047.

The $697.76 million of Series 2017B general revenue refunding bonds were priced as 5s to yield from 2.52% in 2027 to 3.16% in 2038.

The deal is rated Aa3 by Moody's Investors Service, AA-minus by S&P Global Ratings and Fitch Ratings and AA by Kroll Bond Rating Agency.

Since 2007, the New York TBTA has issued about $9.5 billion of debt, with the largest issuance occurring in 2008 when it sold roughly $2.19 billion of debt. The authority saw its lowest issuance total in the past 10 years in 2007 when it issued $223 million. With the sale on Thursday, the authority has already issued more than it did since 2013.

RBC Capital Markets is expected to price Austin, Texas' $346.795 million of Series 2017 airport system revenue bonds for the Austin-Bergstrom International Airport. The deal is rated A1 by Moody's and A by S&P.

Piper Jaffray received the official award on the University of Connecticut's $345.15 million of general obligation bonds.

The $311.2 million of Series 2017A GOs were priced to yield from 1.05% with a 2.5% coupon in 2018 to 3.54% with a 5% coupon in 2037. The $33.95 million of Series 2017A refunding GOs were priced to yield from 1.05% with a 2.5% coupon in 2018 to 2.11% with 5% and 4% coupon in a split 2022 maturity.

The deal is rated Aa3 by Moody's, AA-minus by S&P and A-plus by Fitch.

In the competitive arena, Ohio sold $350 million of bonds in two separate deals.

Citigroup won the $300 million of Series 2017A common schools general obligation bonds with a true interest cost of 3.35%. Pricing information was not immediately available.

Robert W. Baird won the $50 million of Series 2017A conservation projects GOs with a TIC of 2.96%.

The deals are rated Aa1 by Moody's and AA-plus by S&P and Fitch.

Bond Buyer Visible Supply

The Bond Buyer's 30-day visible supply calendar decreased $1.28 billion to $14.55 billion on Thursday. The total is comprised of $3.33 billion of competitive sales and $11.23 billion of negotiated deals.

Municipal CUSIP Requests Fell 27% in Dec.

Demand for new municipal CUSIP identifiers plunged 27% in December after dropping 10% in November, CUSIP Global Services said in a report released on Thursday. The report tracks requests by issuers for bond identifiers as an early indicator of new volume.

A total of 900 new municipal bond identifier requests were made last month, down from 1,231 in November.

December's results marked the first time since January 2016 that muni bond CUSIP activity fell below the 1,000 mark. Last month's performance was also the slowest month for bond identifier requests since January 2015.

On a year-over-year basis, CUSIP requests for new muni bond identifiers were up 6.2% last year to 15,714 from 14,802 in 2015, reflecting a strong appetite for new issuance throughout most of 2016.

Among all municipal asset classes, CUSIP demand rose 5.5% to 18,235, the best year since 2012 when 19,417 orders were processed.

"The new issuance market is clearly signaling a sense of uncertainty about future issuance volume as we head into 2017," Gerard Faulkner, director of operations for CUSIP Global Services, said in a press release. "With all signs pointing to a higher rate environment this year, it will be interesting to see whether issuers resume the frenetic pace we saw throughout 2015 and 2016 or whether they will revert to more historically normal volumes."

Tax-Exempt Money Market Fund Outflows

Tax-exempt money market funds experienced inflows of $1.37 billion, bringing total net assets to $131.64 billion in the week ended Jan. 9, according to The Money Fund Report, a service of iMoneyNet.com. This followed an outflow of $851.3 million to $130.27 billion in the previous week.

The average, seven-day simple yield for the 237 weekly reporting tax-exempt funds decreased to 0.25% from 0.27% in the previous week.

The total net assets of the 863 weekly reporting taxable money funds decreased $14.38 billion to $2.532 trillion in the week ended Jan. 10, after an outflow of $20.11 billion to $2.547 trillion the week before.

The average, seven-day simple yield for the taxable money funds increased to 0.25% from 0.24% in the previous week.

Overall, the combined total net assets of the 1,100 weekly reporting money funds fell $13.01 billion to $2.664 trillion in the week ended Jan. 10 after inflows of $20.96 billion to $2.677 trillion in the prior week.

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