Top rated municipal bonds finished weaker on Thursday, according to traders, as the last week's new issue supply sold in the primary, led by Massachusetts, Illinois and Pennsylvania issuers.
The yield on the 10-year benchmark muni general obligation rose one basis point to 1.41% from 1.40% on Wednesday, while the yield on the 30-year increased one basis point to 2.12% from 2.11%, according to the final 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 0.79% from 0.76% on Wednesday, the 10-year Treasury yield gained to 1.58% from 1.55% and the yield on the 30-year Treasury bond increased to 2.27% from 2.24%.
The 10-year muni to Treasury ratio was calculated at 89.8% on Thursday compared to 90.0% on Wednesday, while the 30-year muni to Treasury ratio stood at 93.8% versus 94.2%, according to MMD.
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%. The deal was priced as 4s to yield from 2.30% in 2031 to 2.61% in 2037; a 2042 term bond was priced as 4s to yield 2.67% and a 2046 term was priced as 3s to yield 3.10%.
Morgan Stanley won the $284.55 million of Series 2016C GO refunding bonds with a TIC of 1.28%. The issue was priced as 5s to yield from 0.72% in 2020 to 1.49% in 2026.
The deals are rated Aa1 by Moody's Investors Service and AA-plus by S&P Global Ratings and Fitch Ratings.
The bond sales came a day after the Bay State competitively sold $1.5 billion of general obligation revenue anticipation notes.
Also on the competitive slate on Thursday, the state of Illinois sold about $561 million of sales tax revenue bonds in four separate offerings under the Build Illinois Bonds program.
Bank of America Merrill Lynch won the $186.76 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. The sale is rated triple-A by S&P and AA-plus by Fitch.
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% while 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 on these deals wasn't 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%. The taxables were priced at par to yield from 1.08% in 2018 to 3.17% in 2034. The taxables are rated triple-A by S&P and AA-plus by Fitch.
The Pennsylvania Higher Educational Facilities Authority competitively sold about $298.11 million of State System of Higher Education revenue bonds in two separate sales.
JPMorgan won the $279.05 million of Series AT-1 tax-exempts with a TIC of 3.00%. The deal was priced to yield from 0.60% with a 4% coupon in 2017 to 2.89% with a 4% coupon in 2036; a 2045 term was priced as 3s to yield about 3.105% and a 2055 term was priced as 5s to yield 2.85%.
The deal is rated Aa3 by Moody's and AA-minus by Fitch.
Raymond James won the $19.06 million of Series AT-2 taxables with a TIC of 3.03%. The issue was priced to yield from 1% at par to 3.06% with a 3% coupon in 2030; a 2033 maturity was prices as 3 1/8s to yield 3.20% and a 2036 maturity was priced as 3.20s to yield 3.30%. The deal is rated Aa3 by Moody's and AA-minus by Fitch except for the 2025-2027 maturities which are insured by Assured Guaranty Municipal and rated AA by S&P.
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.
MSRB: Previous Session's Activity
The Municipal Securities Rulemaking Board reported 36,897 trades on Wednesday on volume of $15.54 billion.
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.
