The muni market is set for a holiday hiatus after a furious few weeks of action, spurred by tax reform, produced almost $58 billion in bond sales -- a record for December.
As of press time, there were no deals $100 million or larger scheduled to price the week after Christmas. The extended period of calmness comes after market municipal participants spent the fast few weeks doing everything they could to speed up deals, to get them in ahead of tax reform changes.
The breakneck pace resulted in a record of $57.89 billion of issuance for the month, beating the previous December mark of $54.7 billion that occurred in 1985.
President Trump signed the tax overhaul bill on Friday morning, after some rumblings that he might not sign it until January.
The MBIS municipal non-callable 5% GO benchmark scale was stronger in trading on Friday.
The 10-year muni benchmark yield dipped to 2.381% from 2.383% Thursday’s final read, according to Municipal Bond Information Services. The MBIS 30-year benchmark muni yield dropped to 2.840% from 2.859%.
The MBIS benchmark index, which is comprised of investment-grade municipal securities, is updated hourly on the Bond Buyer Data Workstation.
Top-rated municipal bonds were stronger at Friday’s early market close. The yield on the 10-year benchmark muni general obligation was two basis points lower to 2.10% from 2.12% on Thursday, while the 30-year GO decreased two basis points to 2.68% from 2.70%, according to a final read of MMD’s triple-A scale.
U.S. Treasuries were weaker to close Friday. The yield on the two-year Treasury nudged up to 1.89% from 1.87%, the 10-year Treasury yield increased to 2.49% from 2.48% and the yield on the 30-year Treasury rose to 2.84% from 2.83%.
On Friday, the 10-year muni-to-Treasury ratio was calculated at 84.4% compared with 85.6% on Thursday, while the 30-year muni-to-Treasury ratio stood at 94.4% versus 95.3%, according to MMD.
Lipper: Muni bond funds saw inflows
Investors in municipal bond funds saw a cash infusion for second week in a row, according to Lipper data released on Thursday.
The weekly reporters saw $250.663 million of inflows in the week of Dec. 13, after inflows of $216.923 million in the previous week.
Exchange traded funds reported inflows of $212.354 million, after inflows of $146.556 million in the previous week. Ex-ETFs, muni funds saw $38.309 million of outflows, after inflows of $70.366 million in the previous week.
The four-week moving average turned to negative $59.796 million, after being in the green at $42.348 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 had inflows of $399.232 million in the latest week after inflows of $376.086 million in the previous week. Intermediate-term funds had inflows of $128.869 million after outflows of $54.970 million in the prior week.
National funds had inflows of $323.331 million after inflows of $424.665 million in the previous week.
High-yield muni funds reported inflows of $153.089 million in the latest week, after inflows of $249.618 million the previous week.
Week's actively traded issues
Some of the most actively traded bonds by type in the week ended Dec. 22 were from Puerto Rico, New Jersey and Texas issuers, according to Markit.
In the GO bond sector, the Commonwealth of Puerto Rico 8s of 2035 were traded 54 times. In the revenue bond sector, the New Jersey Turnpike Authority 4s of 2043 were traded 87 times. And in the taxable bond sector, the Houston 3.961s of 2047 were traded 30 times.
Week's actively quoted issues
Puerto Rico, New Jersey and California names were among the most actively quoted bonds in the week ended Dec. 22, according to Markit.
On the bid side, Puerto Rico Commonwealth GO 5s of 2041 were quoted by 79 unique dealers. On the ask side, the New Jersey Turnpike Authority revenue 3.25s of 2038 were quoted by 291 dealers. And among two-sided quotes, Los Angeles Unified School District taxables 5.75s of 2034 were quoted by 22 unique dealers.
Data appearing in this article from Municipal Bond Information Services, including the MBIS municipal bond index, is available on The Bond Buyer Data Workstation. Click here for a brief tour of the Workstation, or contact Vanessa Kim at 212-803-8474 for more information.