Munis Weaken as Hawaii, Mass. Issues Sell

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 screens, topped by Hawaii and Massachusetts issues.

Secondary Market

The yield on the 10-year benchmark muni general obligation rose as much as one basis point from 1.48% on Wednesday, while the yield on the 30-year climbed as much as one basis point from 2.27%, according to a read of Municipal Market Data's triple-A scale.

"Tax-exempt trading was very quiet to open Thursday's session, with oil continuing to rally on yesterday's late OPEC announcement of a possible crude production limit," Gregory Saulnier, research analyst at MMD, wrote in a market comment. "Adding further pressure to Treasuries was an uptick in German inflation [to its highest level in 16 months]."

Treasuries were weaker on Thursday. The yield on the two-year Treasury rose to 0.76% from 0.75% on Wednesday, the 10-year Treasury yield gained to 1.58% from 1.56% and the yield on the 30-year Treasury bond increased to 2.30% from 2.29%.

On Wednesday, the 10-year muni to Treasury ratio was calculated at 94.6% compared to 95.2% on Tuesday, while the 30-year muni to Treasury ratio stood at 99.3% versus 99.7%, according to MMD.

MSRB: Previous Session's Activity

The Municipal Securities Rulemaking Board reported 36,788 trades on Wednesday on volume of $17.999 billion.

Primary Market

Citigroup priced Hawaii's $861.47 million of 2016 general obligation bonds for institutions on Thursday after a one-day retail order period.

For institutions, the $375 million of Series FG GOs were priced to yield from 0.95% with 3% and 5% coupons in a spilt 2019 maturity to 2.62% with a 4% coupon in 2036.

The $483.08 million of Series FH refunding GOs, which were not offered to retail, were priced to yield from 1.14% with 3% and 5% coupons in a split 2021 maturity to 2.32% in 2031.

The $3.39 million of Series FI refunding GOs were priced to yield from 1.14% with a 2% coupon in 2021 to 2.18% with a 5% coupon in 2033.

The deal is rated Aa1 by Moody's Investors Service, AA-plus by S&P Global Ratings and AA by Fitch Ratings.

Since 2006, Hawaii has issued over $11 billion of bonds with the most issuance occurring in 2001 when it sold $1.7 billion of debt. The Aloha State sold the least amount of debt, in that period, in 2007 when it issued $401.6 million of bonds.

Morgan Stanley priced Massachusetts' $435.72 million of Series 2016A commonwealth transportation fund revenue bonds for rail enhancement and accelerated bridge programs and Series 2016A commonwealth transportation fund revenue refunding bonds for institutions after a one-day retail order period.

For institutions, the $331.28 million of Series 2016A CTF revenue bonds were priced to yield from 0.87% with a 4% coupon in 2019 to 2.31% with a 5% coupon in 2038; a split 2041 maturity was priced at par to yield 3% and as 5s to yield 2.35%; a 2046 maturity was priced as 5s to yield 2.40%. A 2018 maturity was offered as a sealed bid.

The $104.45 million of Series 2016A CTF revenue refunding bonds were priced to yield from 1.22% with a 5% coupon in 2023 to 1.88% with a 5% coupon in 2029.

The deal is rated Aa1 by Moody's and triple-A by S&P.

Morgan Stanley is also set to price Massachusetts' $127.17 million of Series 2016A federal highway grant anticipation notes for the accelerated bridge program. That deal is rated Aa2 by Moody's.

In the competitive arena, Mecklenburg County, N.C., sold $200 million of Series 2016B GO public improvement bonds. Citi won the bonds with a true interest cost of 2.28%.

The deal was priced to yield from 0.75% with a 5% coupon in 2017 to 2.66% with a 3% coupon in 2035. The deal is rated triple-A by Moody's, S&P and Fitch.

The county last competitively sold comparable bonds on Feb. 24, 2015, when JPMorgan Securities won $100 million of Series 2015A GO school bonds with a TIC of 2.62%.

Looking ahead, the California State Public Works Board's $527.54 million of lease revenue refunding bonds, which had been slated to be priced by Wells Fargo Securities on Tuesday, will now be coming to market next week.

Loop Capital Markets and Raymond James & Associates were named joint senior managers for the delayed sale after Wells was sanctioned by the California state Treasurer.

Jefferies said it will price the state of California's $200 million of GO index floating rates consisting of Series 2016B new issue bonds and a Series 2013C remarketing. The deal is rated Aa3 by Moody's and AA-minus by S&P and Fitch.

Bond Buyer Visible Supply

The Bond Buyer's 30-day visible supply calendar decreased $430.4 million to $15.98 billion on Thursday. The total is comprised of $3.05 billion of competitive sales and $12.93 billion of negotiated deals.

Tax-Exempt Money Market Fund Outflows

Tax-exempt money market funds experienced outflows of $5.13 billion, bringing total net assets to $134.40 billion in the week ended Sept. 26, according to The Money Fund Report, a service of iMoneyNet.com. This followed an outflow of $5.53 billion to $139.53 billion in the previous week.

The average, seven-day simple yield for the 247 weekly reporting tax-exempt funds rose to 0.27% from 0.21% in the previous week.

The total net assets of the 886 weekly reporting taxable money funds increased $19.63 billion to $2.524 trillion in the week ended Sept. 27, after an outflow of $23.27 billion to $2.504 trillion the prior before.

The average, seven-day simple yield for the 881 taxable money funds remained at 0.12% from the week before.

Overall, the combined total net assets of the 1,128 weekly reporting money funds rose $14.50 billion to $2.658 trillion in the period ended Sept. 27, which followed an outflow of $28.80 billion to $2.644 trillion.

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