Top rated municipal bonds were weaker at mid-session, according to traders, as the last week's new issue supply sold in the primary, led by Illinois, Massachusetts and Pennsylvania issuers on Thursday.
Secondary Market
The yield on the 10-year benchmark muni general obligation was as much as one basis point stronger from 1.40% on Wednesday, while the yield on the 30-year was as much as one basis point stronger from 2.11%, according to a read of Municipal Market Data's triple-A scale.
U.S. Treasuries were weaker on Thursday. The yield on the two-year Treasury rose to 0.77% from 0.76% on Wednesday, the 10-year Treasury yield gained to 1.57% from 1.55% and the yield on the 30-year Treasury bond increased to 2.25% from 2.24%.
On Wednesday, the 10-year muni to Treasury ratio was calculated at 90.0% compared to 90.3% on Tuesday, while the 30-year muni to Treasury ratio stood at 94.2% versus 94.6%, according to MMD.
MSRB: Previous Session's Activity
The Municipal Securities Rulemaking Board reported 36,897 trades on Wednesday on volume of $15.54 billion.
Primary Market
Massachusetts competitively sold about $835 million of general obligation bonds in two separate sales.
Barclays Capital won the $550 million of Consolidated Loan of 2016 Series G general obligation bonds with a true interest cost of 3.196%. Pricing information was not immediately available.
Morgan Stanley won the $284.55 million of Series 2016C GO refunding bonds with a TIC of 1.28%. Pricing information was not immediately available.
The deals are rated Aa1 by Moody's Investors Service and AA-plus by S&P Global Ratings and Fitch Ratings.
The bond sale came one day after the Bay State competitively sold $1.5 billion of general obligation revenue anticipation notes in three separate offerings.
Also on the competitive slate, the state of Illinois sold about $573 million of sales tax revenue bonds in four separate offerings under the Build Illinois Bonds program.
Bank of America Merrill Lynch won the $198.62 million of junior obligation tax-exempt refunding bonds Series D of September 2016 with a TIC of 2.49%. The issue was priced to yield from 1.20% with a 4% coupon in 2021 to 2.95% with a 3% coupon in 2034.
PNC Capital Markets won the $164.31 million of junior obligation tax-exempt refunding bonds Series C of September 2016 with a TIC of 2.35%. Pricing information was not immediately available.
RBC Capital Markets won the $150.03 million of junior obligation tax-exempt refunding bonds Series A of September 2016 with a TIC of 2.397%. Pricing information was not immediately available.
JPMorgan Securities won the $60.01 million of junior obligation taxable refunding bonds Series B of September 2016 with a TIC of 2.75%. Pricing information was not immediately available.
The deals are rated triple-A by S&P and AA-plus by Fitch.
And the Pennsylvania Higher Educational Facilities Authority is competitively selling about $292.41 million of State System of Higher Education revenue bonds in two separate sales.
JPMorgan won the $273.34 million of Series AT-1 tax-exempts with a TIC of 3.00%. Pricing information was not immediately available.
Raymond James won the $19.07 million of Series AT-2 taxables with a TIC of 3.03%. Pricing information was not immediately available.
The deals rare rated Aa3 by Moody's and AA-minus by Fitch.
Since 2006, the Pennsylvania HEFA has sold about $8.5 billion of debt with the largest issuance occurring in 2015 when it sold about $1.39 billion of bonds, marking only the third time it has issued greater than $1 billion since 2006. The authority sold the least amount of debt in 2014 when it issued $143 million of bonds.
In the negotiated sector, JPMorgan received the written award on the Maryland Department of Housing and Community Development's $325.8 million of Series 2016A taxable residential revenue bonds for the Community Development Administration.
The issue was priced at par to yield from 0.784% and 1.024% in a split 2017 maturity to 2.913% and 2.963% in a split 2027 maturity; a 2031 maturity was priced at par to yield 3.463% and a 2047 maturity was priced as 3 1/2s to yield 2.545%. The deal is rated Aa2 by Moody's and AA by Fitch.
Siebert Brandford Shank received the official award on Dallas County, Texas' $167.9 million of Series 2016 combination tax and parking garage revenue certificates of obligation.
The issue was priced to yield from 1.04% with a 1% coupon in 2017 to 2.49% with a 3% coupon in 2031. The deal is rated triple-A by Moody's and S&P.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar decreased $2.24 billion to $10.01 billion on Thursday. The total is comprised of $4.27 billion of competitive sales and $5.74 billion of negotiated deals.
Tax-Exempt Money Market Fund Outflows
Tax-exempt money market funds experienced outflows of $11.64 billion, bringing total net assets to $159.33 billion in the week ended Aug. 22, according to The Money Fund Report, a service of iMoneyNet.com. This followed an outflow of $8.74 billion to $170.97 billion in the previous week.
The average, seven-day simple yield for the 263 weekly reporting tax-exempt funds rose to 0.10% from 0.09% in the previous week.
The total net assets of the 883 weekly reporting taxable money funds increased $27.72 billion to $2.551 trillion in the week ended Aug. 23, after an outflow of $5.35 billion to $2.523 trillion the prior before.
The average, seven-day simple yield for the taxable money funds remained at 0.11% from the week before.
Overall, the combined total net assets of the 1,146 weekly reporting money funds rose $16.08 billion to $2.710 trillion in the period ended Aug. 23, which followed an outflow of $14.09 billion to $2.694 trillion.
