The municipal bond market was taking a breather on Friday as it worked through the biggest new issue calendar of the year.
Traders were looking ahead to next week's supply, which while healthy will be slightly less bulky than this week's slate.
Primary Market
Topping next week's negotiated calendar is the city and county of Honolulu, Hawaii's $879 million of Series A-D tax-exempt and Series E taxable general obligation bonds, scheduled to be priced on Tuesday by Bank of America Merrill Lynch.
Citigroup Global Markets is expected to price the North Carolina Medical Care Commission's $376 million of bonds for Vidant Health on Monday. The issue is expected to be structured as serials from 2016-35 with a 2039 term bond.
Citi is also scheduled to price the state of Oregon's $296 million of GOs, under Article XI for state projects on Monday.
And Goldman, Sachs is set to price the Illinois Finance Authority's $283 million of Series 2015C revenue refunding bonds for the Silver Cross Hospital and Medical Center on Tuesday.
The largest competitive bond sale during the week is slated for Wednesday - the Omaha Public School District No. 001, Neb.'s $141 million of Series 2015 GOs. The bonds, rated Aa1 by Moody's Investors Service and triple-A by Standard & Poor's, mature serially from 2024 to 2040. The school district last sold bonds competitively on July 11, 2001, when Merrill Lynch won $100 million of Series 2001B GOs with a true interest cost of 5.0372%.
Secondary Market
Treasury prices were mixed on Friday. The yield on the two-year Treasury note was flat from 0.66% on Thursday, while the 10-year yield remained at 2.09% and the 30-year yield increased to 2.69% from 2.67%.
Prices of top-quality munis ended stronger on Thursday. The yield on the 10-year benchmark muni general obligation fell four basis points to 2.14% from 2.18% on Wednesday, while the yield on 30-year GO fell four basis points to 2.94% from 2.98%, 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 102.1% versus 103.3% on Wednesday, while the 30-year muni to Treasury ratio stood at 109.7% compared to 111.0%.
Tax-Exempt Bond Funds See Inflows
Municipal bond funds which report weekly posted $152.957 million of inflows in the week ended March 11, after experiencing inflows of $408.481 million in the week ended March 4, according to the latest Lipper data. It was the 10th straight week muni funds experienced inflows.
The four-week moving average remained positive at $262.454 million in the latest week after being in the green at $339.278 million in the prior week. A moving average is an analytical tool used to smooth out price changes by filtering out fluctuations.
Muni bond funds so far have experienced inflows in each week of 2015, according to Lipper data. Inflows for the year total about $5.789 billion.
Long-term muni bond funds saw inflows of $110.328 million in the latest week, after experiencing inflows of $200.363 million in the previous week.
High-yield muni funds recorded an outflow of $51.421 million in the latest reporting week, after seeing inflows of $124.114 million in the previous week. Exchange-traded funds had inflows of $75.130 million, after recording inflows of $83.539 million in the previous week.
In contrast, long-term municipal bond mutual funds posted $675 million of inflows in the week ended March 4, according to the Investment Company Institute. ICI reported that inflows into long-term funds were $1.003 billion in the previous week.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar decreased $554.7 million to $11.845 billion on Friday. The total is comprised of $2.681 billion competitive sales and $9.164 billion of negotiated deals.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 39,712 trades on Thursday on volume of $11.572 billion.
Most active on Thursday, based on the number of trades, was the New York Metropolitan Transportation Authority Series 2015B transportation revenue 4s of 2025, which traded 402 times at an average price of 100.085 with an average yield of 3.984%; (initial offering price of 100.161 and an initial offering yield of yield of 3.980%).
Fed Estimates Size of Municipal Bond Market at $3.652T in Q4
The size of the municipal bond market increased in the fourth quarter of 2014, according to data released Thursday by Federal Reserve.
The muni market now is estimated at $3.652 trillion, up from an estimated $3.631 trillion in the third quarter of last year, the Fed's flow of funds report shows. The market's size was pegged by the Fed at $3.671 trillion in the fourth quarter of 2013.
Holdings of municipal securities by households declined in the fourth quarter to $1.540 trillion from $1.555 trillion in the third quarter of last year. In the fourth quarter of 2013, retail investors held $1.618 trillion of munis.
Holdings by mutual funds increased to $658.4 billion in the fourth quarter from $643.2 billion in the third quarter and $613.9 billion in the fourth quarter of 2013. Holdings by money market funds increased to $281.7 billion in the fourth quarter from $278.7 billion in the third quarter but fell from $308.3 billion in the fourth quarter of 2013.
Elsewhere, the level of state and local government debt increased at an annual rate of 1.1% in the fourth quarter, according to Fed data, after decreasing at an annual rate of 2.8% in the previous quarter.
The debt of the federal government rose 5.4% at an annual rate in the fourth quarter, down from a 7.2% annual rate in the third quarter, according to the Fed.
And debt of households increased at an annual rate of 2.7% in the fourth quarter.
