The municipal bond market took a break after a week of heavy new issuance to review another strong jobs report and look ahead to next week's meeting of the Federal Reserve.
Non-farm payrolls rose 235,000 in February, far above the 190,000 gain predicted by economists polled by IFR Markets. The data cements the case for those who believe the Federal Open Market Committee will raise interest rates at its meeting next week.
U.S. Treasuries were little unchanged on the news. The yield on the two-year Treasury was flat from 1.36% on Thursday, while the 10-year Treasury yield declined to 2.58% from 2.59%, and the yield on the 30-year Treasury bond decreased to 3.17% from 3.18%.
Top-quality municipal bonds ended weaker on Thursday. The 10-year benchmark muni general obligation yield rose one basis point to 2.47% from 2.46% on Wednesday, while the yield on the 30-year GO increased one basis point to 3.24% from 3.23%, according to the final read of Municipal Market Data's triple-A scale.
On Thursday, the 10-year muni to Treasury ratio was calculated at 95.1% compared to 96.4% on Wednesday, while the 30-year muni to Treasury ratio stood at 101.9%, versus 102.7%, according to MMD.
MSRB: Previous Session's Activity
The Municipal Securities Rulemaking Board reported 45,827 trades on Thursday on volume of $14.57 billion.
Week's Primary
The market saw lots of new issuance hit the screens this week, topped by the biggest sale of 2017 as Citigroup priced the state of California's $2.79 billion of various purpose general obligation bonds in a deal that was upsized from $2.45 billion. The deal is rated Aa3 by Moody's Investors Service and AA-minus by S&P Global Ratings and Fitch Ratings.
Citi also priced the city of Los Angeles Department of Water and Power's $344.575 million of Series 2017B power system revenue bonds. The deal is rated Aa2 by Moody's and AA-minus by S&P and Fitch.
JPMorgan Securities priced the New York City Transitional Finance Authority's $800 million of future tax secured subordinate refunding bonds in a deal that consisted of $761.12 million of Fiscal 2017 Series C future tax secured tax-exempt subordinated bonds and $38.88 million of Fiscal 2017 Series D future tax secured tax-exempt subordinated bonds. The deal is rated Aa1 by Moody's and triple-A by S&P and Fitch.
Jefferies priced the New York Metropolitan Transportation Authority's $325.56 million of transportation revenue green bonds in a deal that consisted of $188.92 million of Subseries 2017A-1 climate bond certified transportation revenue green bonds and $136.64 million of Subseries 2017A-2 climate bond certified transportation revenue refunding green bonds. The deal is rated A1 by Moody's, AA-minus by S&P, A by Fitch and AA-plus by Kroll Bond Rating Agency.
JPMorgan priced the New York State Housing Finance Agency's $155.55 million of climate bond certified green bonds in a deal that consisted of $56.29 million of Series 2017D affordable housing revenue green bonds and $99.27 million of Series 2017E affordable housing revenue green bonds. The deal is rated Aa2 by Moody's.
Goldman Sachs priced the New Jersey Educational Facilities Authority's $338.44 million of Series 2017B revenue refunding bonds for Princeton University. The deal is rated triple-A by Moody's and S&P.
Bank of America Merrill Lynch priced the West Virginia Finance Authority's $184.12 million of Series 2017A hospital revenue improvement bonds for the West Virginia University Health System Obligated Group. The deal is rated A2 by Moody's and A by S&P.
RBC Capital Markets priced the Coast Community College District in Orange County, Calif.'s Election of 2012 $280 million of Series 2017D tax-exempt general obligation bonds and $20 million of Series 2017E taxable GOs. The deal is rated Aa1 by Moody's and AA-plus by S&P.
RBC also priced the Texas Public Finance Authority's $141.52 million of Series 2017A GO refunding bonds. The deal is rated triple-A by Moody's and S&P.
Wells Fargo Securities priced the University of Pittsburgh's $104.4 million of Series 2017B taxable university refunding bonds. The deal is rated Aa1 by Moody's and AA-plus by S&P.
In the competitive arena, Maryland sold almost $1.15 billion of tax-exempt and taxable general obligation bonds in three separate sales. BAML won the $575 million of First Series A tax-exempt GOs, state and local facilities loan of 2017, with a true interest cost of 2.83%.BAML also won the $470.89 million of First Series C tax-exempt refunding GOs, state and local facilities loan of 2017, with a TIC of 1.72%. Wells Fargo Securities won the $100 million of First Series B taxable GOs, state and local facilities loan of 2017, with a TIC of 2.03%. All three deals are rated triple-A by Moody's, S&P and Fitch.
Wisconsin sold $340.39 million of Series 2017 unlimited tax GOs. Citi won the bonds with a true interest cost of 3.44%. The deal is rated Aa2 by Moody's and AA by S&P and Fitch.
Boston sold $150 million of Series 2017A unlimited tax GOs. Citi won the deal with a TIC of 2.67%. The deal is rated triple-A by Moody's and S&P.
Sullivan County, Tenn., competitively sold $135.74 million of Series 2017 GOs. Wells Fargo Securities won the deal with a TIC of 3.07%. The deal is rated Aa2 by Moody's.
The Springdale School District No. 50, Ark., competitively sold $128.8 million of limited tax GO refunding bonds on Tuesday. Morgan Stanley won the bonds with a TIC of 3.65%. The deal is rated Aa2 by Moody's.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar increased $1.50 billion to $10.96 billion on Friday. The total is comprised of $4.77 billion of competitive sales and $6.19 billion of negotiated deals.
Lipper: Muni Bond Funds Report Outflows
Investors in municipal bond funds continued to withdraw cash in the latest week, according to Lipper data released late Thursday. The weekly reporters saw $73.145 million of outflows in the week ended March 8, after outflows of $346.225 million in the previous week.
The four-week moving average remained in the green at positive $52.510 million, after being positive at $146.846 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 had outflows, losing $25.122 million in the latest week after falling $228.545 million in the previous week. Intermediate-term funds had outflows of $1.386 million after outflows of $41.652 million in the prior week.
National funds had inflows of $669,000 after outflows of $239.790 million in the previous week. High-yield muni funds reported inflows of $17.823 million in the latest reporting week, after inflows of $48.366 million the previous week.
Exchange traded funds saw inflows of $11.944 million, after inflows of $105.083 million in the previous week.
