Municipal bonds finished unchanged to stronger on Thursday, traders said, as yields on top-rated maturities fell by as much as four basis points on the long end.
In the primary, the last of the week's larger new issues came to market, topped off by the Indiana Power Agency's $366.35 million deal.
Primary Market
Citigroup priced the IPA's Series 2016A power supply system refunding revenue bonds as 5s to yield from 3.05% in 2033 to 3.27% in 2037; a 2042 split maturity was priced as 4s to yield 3.72% and as 5s to yield 3.35%. The issue was rated A1 by Moody's Investors Service, and A-plus by Standard & Poor's and Fitch Ratings.
RBC Capital Markets received the official award on the Metropolitan Water District of Southern California's $208.26 million of Series 2015 water revenue bonds. The issue was priced as 5s to yield from 0.78% in 2018 to 2.24% in 2028; a 2040 term bond was priced as 5s to yield 2.86% and a 2045 term was priced as 4s to yield 3.32%. The deal was rated Aa1 by Moody's, triple-A by S&P and AA-plus by Fitch.
Wells Fargo Securities priced the Water Replenishment District of Southern California Financing Authority's $148.35 million of Series 2015 replenishment assessment revenue bonds. The issue was priced to yield from 0.35% with a 3% coupon in 2016 to 2.82% with a 5% coupon in 2037; a 2041 maturity was priced as 5s to yield 2.91% and a 2045 maturity was priced as 4s to yield 3.39%. The bonds were rated AA-plus by S&P and Fitch.
Morgan Stanley priced the New Jersey Health Care Facilities Financing Authority's $258.25 million of Series 2015A revenue and refunding bonds, University Hospital issue. The deal was priced as 5s to yield from 2.26% in 2021 to 3.67% in 2030; a 2038 maturity was priced as 4 1/8s to yield 4.15% and a 2046 maturity was priced as 5s to yield 4.14%. The issue was insured by Assured Guaranty Municipal and rated A2 by Moody's and AA by S&P; it carries an underlying rating of triple-B from Fitch.
RBC priced the Park Creek Metropolitan District, Colo.'s $231.17 million of Series 2015A senior limited property tax supported revenue refunding bonds.
The issue was priced to yield from 0.92% with a 2% coupon in 2016 to 3.82% with a 5% coupon in 2035; a 2045 term bond was priced as 5s to yield 4%. The bonds were rated triple-B by Fitch.
Bank of America Merrill Lynch priced the city of Columbus, Ohio's $155.61 million of Series 2015 sewerage system revenue refunding bonds. The issue was priced as 5s to yield 2.50% in 2029, at par to yield 3% and as 5s to yield 2.57% in a split 2030 maturity and as 3s to yield 3.17% and as 5s to yield 2.67% in a split 2032 maturity. The bonds were rated Aa1 by Moody's and AA-plus by S&P.
"Demand for the week's new issue slate has been strong," Alan Schankel, Municipal Strategist at Janney, wrote in a Thursday comment. "Issues such as $343 million Illinois State Toll Highway Authority (Aa3/AA-minus/AA-minus) and $325 million NYC MTA (A1/AA-minus/A) have been well received, with yield reductions of as much as five basis points on the way to final pricing."
Secondary Market
The yield on the 10-year benchmark muni general obligation was unchanged from 1.97% on Wednesday, while the 30-year yield was off four basis points to 2.85% from 2.89%, according to the final read of Municipal Market Data's triple-A scale.
U.S. Treasuries slumped as the yield on the two-year rose to 0.95% from 0.92% on Wednesday while the 10-year yield gained to 2.23% from 2.20% and the 30-year Treasury increased to 2.97% from 2.96%.
The 10-year muni to Treasury ratio was calculated on Thursday at 88.1% compared to 89.3% on Wednesday, while the 30-year muni to Treasury ratio stood at 95.8% compared to 97.6%, according to MMD.
Tax-Exempt Money Market Funds Post Inflows
Tax-exempt money market funds experienced inflows of $3.22 billion, bringing total net assets to $249.52 billion in the period ended Dec. 7, according to The Money Fund Report, a service of iMoneyNet.com. This followed an inflow of $617.9 million to $246.30 billion in the previous week.
The average, seven-day simple yield for the 373 weekly reporting tax-exempt funds remained at 0.01% for the 136th straight week.
The total net assets of the 950 weekly reporting taxable money funds rose $15.57 billion to $2.519 trillion in the period ended Dec. 8, after an outflow of $2.65 billion to $2.504 trillion the previous week.
The average, seven-day simple yield for the taxable money funds remained at 0.02% for the 47th week in a row.
Overall, the combined total net assets of the 1,323 weekly reporting money funds increased $18.79 billion to $2.769 trillion in the period ended Dec. 8, which followed an outflow of $2.03 billion to $2.750 trillion the week before.
