Municipal bond traders went back to school on Thursday as two big education issues dominated an otherwise lackluster slate. Meanwhile, top quality munis were stronger in early activity.
Primary Market
In the competitive arena, the Los Angeles Unified School District, Calif., sold $455.44 million of Series 2016B general obligation refunding, dedicated unlimited ad valorem property tax bonds.
Morgan Stanley won the deal with a true interest cost of 2.29%. Pricing information was not immediately available.
The deal is rated Aa2 by Moody's Investors Service and AAA by Fitch Ratings.
The last time the LAUSD competitively sold comparable bonds was on May 6, 2015, when JPMorgan Securities won $326.05 million of Series 2015A GO refunding bonds with a TIC of 1.87%.
Since 2006, the LAUSD has sold $14.86 billion of securities, with the largest issuance coming in 2009 when it offered $2.92 billion. The district has issued over $2 billion dollars four times since 2006, but has also issued less than $500 million five times over the same span.
In the negotiated sector, HilltopSecurities priced the Grapevine-Colleyville Independent School District, Texas $157.7 million of Series 2016 unlimited tax school building bonds.
The issue was priced to yield from 0.62% with 2% and 5% coupons in a split 2018 maturity to 2.29% with a 5% coupon in 2038; a 2041 term bond was priced as 5s to yield 2.33%. A 2017 maturity was offered as a sealed bid.
The deal, which is backed by the Permanent School Fund guarantee program, is rated triple-A by Moody's and S&P Global Ratings.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar increased $1.61 billion to $11.55 billion on Thursday. The total is comprised of $4.91 billion of competitive sales and $6.64 billion of negotiated deals.
Secondary Market
The yield on the 10-year benchmark muni general obligation was as much as one basis point lower from 1.41% on Wednesday, while the yield on the 30-year muni fell as much as one basis point from 2.13%, according to a read of Municipal Market Data's triple-A scale.
U.S. Treasuries were also stronger on Thursday. The yield on the two-year Treasury declined to 0.71% from 0.73% on Wednesday, the 10-year Treasury yield dipped to 1.54% from 1.56% and the yield on the 30-year Treasury bond decreased to 2.26% from 2.27%.
On Wednesday, the 10-year muni to Treasury ratio was calculated at 90.7% compared to 89.5% on Tuesday, while the 30-year muni to Treasury ratio stood at 94.0% versus 93.2%, according to MMD.
MSRB: Previous Session's Activity
The Municipal Securities Rulemaking Board reported 37,822 trades on Wednesday on volume of $15.75 billion.
Tax-Exempt Money Market Fund Outflows
Tax-exempt money market funds experienced outflows of $8.74 billion, bringing total net assets to $170.97 billion in the week ended Aug. 15, according to The Money Fund Report, a service of iMoneyNet.com. This followed an outflow of $4.45 billion to $179.71 billion in the previous week.
The average, seven-day simple yield for the 270 weekly reporting tax-exempt funds rose to 0.09% from 0.08% in the previous week.
The total net assets of the 884 weekly reporting taxable money funds decreased $5.35 billion to $2.523 trillion in the week ended Aug. 16, after an outflow of $6.09 billion to $2.528 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 1,154 weekly reporting money funds fell $14.09 billion to $2.694 trillion in the period ended Aug. 16, which followed an outflow of $10.54 billion to $2.708 trillion.
