Municipal bond traders are shifting gears on Friday as they switch out of the debt issuance fast lane and onto the off ramp ahead of the upcoming Thanksgiving holiday week.
After one of the busiest primary weeks of the year with over $9 billion of new municipal bond supply coming to market, traders are looking at slim pickings in the upcoming week with only one deal over $100 million on the calendar and no competitive sales slated after Tuesday.
Secondary Market
Municipal yields were weaker on Friday. The yield on the 10-year benchmark muni general obligation was off by as much as one basis point from 2.07% on Wednesday, while the 30-year yield was as much as two basis points lower from 3.02%, according to an early read of Municipal Market Data's triple-A scale.
Treasury yields were little changed on Friday. The two-year Treasury yield rose to 0.89% from 0.88% on Thursday while the 10-year Treasury yield was flat from 2.24% and the 30-year yield gained to 3.01% from 2.99%.
The 10-year muni to Treasury ratio was calculated on Thursday at 92.1% from 93.0% on Wednesday, while the 30-year muni to Treasury ratio stood at 100.5% compared to 101.0%, according to MMD.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 43,641 trades on Thursday on volume of $12.756 billion.
This Week's Primary Market
Bank of America Merrill Lynch led the pricing pack during the week, offering the Massachusetts School Building Authority's $745 million of bonds. The issue was rated Aa2 by Moody's Investors Service and AA-plus by Standard & Poor's and Fitch Ratings.
RBC Capital Markets priced the New Jersey Transportation Trust Fund Authority's $627 million offering, which was rated A3 by Moody's and A-minus by S&P and Fitch.
Barclays Capital Markets priced the state of Connecticut's $650 million of Series F general obligation bonds and Series G green bonds. The deal was rated Aa3 by Moody's and AA by S&P, Fitch and Kroll Bond Rating Agency.
Citigroup priced the San Diego Unified School District, Calif.'s $450 million of 2016 general obligation bonds, consisting of $350 million of Series F GOs and $100 million of Series G GO green bonds. The deal was rated Aa2 by Moody's, triple-A by Fitch and AA-plus by Kroll Bond Rating Agency.
Ramirez & Co. priced the Illinois State Toll Highway Authority's $400 million of senior revenue bonds. The deal was rated Aa3 by Moody's and AA-minus by S&P and Fitch. All three agencies assign a stable outlook.
The authority operates under its own independent statutes with its revenues and operations segregated from that of the state but its leaders are appointed by the governor.
"Thanks to our strong credit and coverage ratios, the Illinois Tollway is able to use this bond sale to continue moving ahead with our Move Illinois capital program while still keeping the costs of borrowing within our projections," Tollway Executive Director Greg Bedalov said in a press release. "This sale maintains our solid financial position as we wrap up construction this year and prepare for another year of extensive work in 2016."
Proceeds from the sale will finance ongoing projects in system's 15-year Move Illinois program while some will go into the debt service reserve.
"This bond sale demonstrates that our Move Illinois Program is on solid financial ground as we improve and expand our roadways to make traveling more convenient for our customers," Tollway Board Chair Bob Schillerstrom said in the release. "These infrastructure investments have allowed the Illinois Tollway projects to support more than 32,000 jobs in the region since the beginning of Move Illinois."
Ramirez also priced the New York City Municipal Water Finance Authority's $350 million of Fiscal 2016 Series BB water and sewer system second general resolution revenue bonds. The issue was rated Aa1 by Moody's and AA-plus by S&P and Fitch.
JPMorgan Securities priced two deals for the Long Island Power Authority totaling $266 million. Both sales were rated Baa1 by Moody's and A-minus by S&P and Fitch.
Morgan Stanley priced the city of Dallas, Texas' $197 million of Series 2015 general obligation refunding and improvement bonds for Dallas, Denton, Collin and Rockwall Counties. The bonds were rated AA by S&P and AA-plus by Fitch.
Morgan Stanley also priced the Miami Beach Redevelopment Agency's $287 million of Series 2015A tax increment revenue and revenue refunding bonds for the City Center/Historic Convention Village. The deal was rated A1 by Moody's and A by S&P except for the 2031, 2040 and 2044 maturities which were insured by AGM and rated AA by S&P.
BAML priced the city of Miami Beach, Fla.'s $196 million of Series 2015 resort tax revenue bonds. The bonds were rated AA3 by Moody's and AA-minus by S&P.
JP Morgan priced the state of Mississippi's $177 million of Series 2015F GOs. The bonds were priced to yield from 2.66% with a 3% coupon in 2026 to 3.54% with a 4% coupon in 2035. The deal was rated Aa2 by Moody's, AA by S&P and AA-plus by Fitch.
Citi priced the city of Phoenix Civic Improvement Corp.'s $115 million of junior lien airport revenue and revenue refunding bonds, not subject to the alternative minimum tax. The issue was rated A1 by Moody's and A-plus by S&P.
Ramirez priced the San Francisco State Building Authority's $103 million of Series 2015A lease revenue refunding bonds for the San Francisco Civic Center complex. The issue was rated A1 by Moody's, A-plus by S&P and A by Fitch.
In the competitive arena, Montgomery County, Md., sold $300 million of GOs to Bank of America Merrill Lynch with a true interest cost of 2.80%. The bonds were rated triple-A by Moody's, S&P and Fitch.
Wisconsin sold $225 million of Series 2016A transportation revenue bonds. Bank of America Merrill Lynch won the deal with a true interest cost of 3.37%. The deal was rated AA-plus by Fitch.
The Maryland Water Quality Finance Administration sold $180 million of Series 2015 Bay restoration fund revenue bonds. Barclays Capital Markets won the deal with a true interest cost of 2.59%. The issue was rated Aa2 by Moody's and AA by S&P.
And the Omaha Metropolitan Utilities District, Neb., sold $189 million of Series 2015 water system improvement and refunding revenue bonds. Citigroup won the deal with a true interest cost of 2.95%. The bonds were rated A1 by Moody's and A-plus by S&P.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar fell $990 million to $5.02 billion on Friday. The total is comprised of $2.58 billion competitive sales and $2.44 billion of negotiated deals.
Municipal Bond Funds See 7th Straight Week of Inflows
Municipal bond funds reported inflows for the seventh week in a row, according to Lipper data released on Thursday.
Weekly reporting funds experienced $384.566 million of inflows in the week ended Nov. 18, after inflows of $329.498 million in the previous week, Lipper said.
The latest inflow brings to 26 out of 47 weeks this year that the funds have seen cash flowing in. Flows for the year to date remain positive, totaling over $3 billion.
The four-week moving average remained positive at $281.524 million after being in the green at $245.562 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 $345.209 million in the latest week, on top of inflows of $165.507 million in the previous week. Intermediate-term funds had inflows of $47.681 million after inflows of $110.967 million in the prior week.
National funds saw inflows of $363.029 million after inflows of $303.467 million in the prior week. High-yield muni funds reported inflows of $127.042 million in the latest reporting week, after an inflow of $52.103 million the previous week.
Exchange traded funds saw inflows of $121.760 million, after inflows of $100.362 million in the previous week.
