Municipal bonds finished weaker on Friday, according to traders, as the beginning of the Passover holiday and the end to a chunky supply week combined to keep trading activity light and tight.
Market participants will see another healthy slate of new issues ready to be priced in the week ahead. Total volume for the week is estimated by Ipreo at $7.98 billion, up from $6.40 billion in the past week, according to revised data from Thomson Reuters. The calendar is divided into $6.35 billion of negotiated deals and $1.63 billion of competitive sales.
The upcoming slate is led off by a $1.89 billion deal from the St. Louis-based Ascension Health Alliance.
"The new issue pace is picking up a bit," with about a quarter of the total new sales coming from just one issuer, Ascension Health, said Janney Municipal Strategist Alan Schankel.
"(Based on Bond Buyer data), healthcare volume was down by 25% in the first quarter," Schankel said. "I expect there is some pent-up demand for bonds in the sector and a strong name such as Ascension should do well."
About $1.1 billion of the Ascension deal is structured as fixed-rates and is slated to sell on Tuesday through the Wisconsin Health & Educational Facilities Authority, the Alabama Special Care Facilities Authority of Birmingham, the Alabama Special Care Facilities Authority of Mobile, and the Michigan Finance Authority.
Morgan Stanley is senior manager and Bank of America Merrill Lynch and JPMorgan are co-managers and remarketing agents.
The system is also pricing $250 million of taxable bonds as soon as Tuesday. The overall deal also includes $575 million of variable-rate issuance, which will be sold by the Wisconsin and Michigan authorities, some on Tuesday and some the following week.
Ahead of the sale, Moody's Investors Service affirmed the system's Aa2 rating and Standard & Poor's and Fitch Ratings affirmed their AA-plus ratings on the system's post-issuance debt load of $6.8 billion.
In the Far West, Bank of America Merrill Lynch is set to price the California Statewide Communities Development Authority's $883 million of Series 2016A revenue bonds for the Loma Linda University Medical Center on Wednesday.
The deal is rated BB by S&P and BB-plus by Fitch.
The junk-rated public offering will be limited to qualified institutional buyers and accredited investors, according to a staff report from the CSCDA, the conduit issuer.
In the competitive arena, Miami-Dade County, Fla., on Tuesday will sell $350 million of Series 2016A general obligation refunding bonds under the Better Communities Program. The sale, which was postponed from the previous week, is rated Aa2 by Moody's and AA by S&P.
Secondary Market
The yield on the 10-year benchmark muni general obligation rose one basis point to 1.65% from 1.64% on Thursday while the 30-year muni yield increased two basis points to 2.60% from 2.58%, according to the final read of the Municipal Market Data's triple-A scale.
Muni yields were higher on the week. On Friday, April 15, the yield on the 10-year muni stood at 1.61% while the 30-year muni was yielding 2.54%
U.S. Treasuries were lower on Friday. The yield on the two-year Treasury increased to 0.82% from 0.81% on Thursday, while the 10-year Treasury yield rose to 1.88% from 1.87% and the yield on the 30-year Treasury bond gained to 2.71% from 2.70%.
The 10-year muni to Treasury ratio was calculated at 87.6% on Thursday compared with 87.6% on Thursday, while the 30-year muni to Treasury ratio stood at 96.3% versus 95.8%, according to MMD.
The Week's Most Actively Quoted Issues
California issues were among the most actively quoted names in the week ended April 22, according to data released from Markit.
On the bid side, the California taxable 7.3s of 2039 were quoted by 13 unique dealers. On the ask side, California taxable 7.6s of 2040 were quoted by 18 unique dealers. And among two-sided quotes, California taxable 7.55s of 2039 were quoted by 12 dealers.
The Week's Most Actively Traded Issues
Some of the most actively traded issues by type in the week ended April 22 were from Massachusetts, Indiana and Nevada, according to Markit.
In the GO bond sector, the Massachusetts Water Resources Authority 4s of 2040 traded 65 times. In the revenue bond sector, the Indiana Finance Authority 6s of 2039 traded 63 times. And in the taxable bond sector, the North Las Vegas, Nev. 6.572s of 2040 traded 19 times, Markit said.
Muni Bond Funds See Inflows for 29th Straight Week
For the 29th week in a row, municipal bond funds reported inflows, according to Lipper data released Thursday, as demand for tax-exempts remained high through tax season.
Weekly reporting funds saw $555.910 million of inflows in the week ended April 20, after inflows of $463.733 million in the previous week, Lipper said.
The four-week moving average remained positive at $577.356 million after being in the green at $663.753 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 experienced inflows, gaining $608.416 million in the latest week after inflows of $407.212 million in the previous week. Intermediate-term funds had inflows of $157.788 million after inflows of $253.410 million in the prior week.
National funds had inflows of $425.537 million on top of inflows of $342.094 million in the previous week. High-yield muni funds reported inflows of $255.632 million in the latest reporting week, after inflows of $160.322 million the previous week.
Exchange traded funds saw inflows of $130.773 million, after outflows of $57.384 million in the previous week.
