The municipal bond market was winding down the week on Thursday as it saw a big, last-minute deal come to market from a Florida issuer.
Prices of top-rated munis were steady, traders said, with yields remaining flat at the close of trading.
Primary Market
The Florida state Board of Education sold $236.495 million of full faith and credit public education capital outlay refunding bonds, 2015 Series A, in a competitive sale.
Wells Fargo Securities won the bonds with a true interest cost of 2.0119%. The bonds were priced to yield from 0.25% with a 5% coupon in 2016 to 2.75% with a 3% coupon in 2029. The issue is rated Aa1 by Moody's Investors Service and AAA by both Standard & Poor's and Fitch Ratings.
"Proceeds of the bonds will be used to refund a portion of the Outstanding State of Florida, Full Faith and Credit, State Board of Education Public Education Capital Outlay Bonds, 2005 Series D and to pay costs of issuance," according to the BOE.
The BOE was last in the market on Sept. 3, 2014 when it sold $214.095 million of public education capital outlay refunding bonds, 2014 Series C, to JPMorgan with a winning TIC of 2.8544%.
Since 1995, the Florida BOE has sold more than $12 billion of refunding bonds. Most of the issuance was centered in the years of 2001, 2005, 2011 and 2012 when more than $1 billion of debt was sold in each year.
Elsewhere, JPMorgan priced the Maryland Health and Higher Educational Facilities Authority's $354.37 million revenue bonds for Medstar Health. The Series 2015 bonds were priced to yield from 0.37% with a 2% coupon in 2016 to 3% with a 5% coupon in 2033; a 2038 term bond was priced as 5s to yield 3.10%; a 2042 term was priced as 5s to yield 3.12%; and a 2045 term was priced as 4s to yield 3.79%. The issue is rated A2 by Moody's, A-minus by S&P and A by Fitch.
Additionally, Morgan Stanley received the official award on the $121.245 million Glendale, Ariz., senior lien water and sewer revenue refunding obligations. The bonds were priced to yield from 0.83% with a 4% coupon in 2018 to 2.54% with a 5% coupon in 2028. The issue is rated A1 by Moody's and AA by S&P.
Also, Citigroup Global Markets received the formal award on the $384 million Kentucky State Property and Building Commission bonds. The $129.62 million of new money revenue bonds, Project No. 108 Series A, were priced with a top yield of 2.94% in 2034 while the $254.38 million of refunding revenue bonds, Project No. 108 Series B, were priced with a top yield of 2.49% in 2026. Both series are rated Aa3 by Moody's and A-plus by S&P and Fitch.
Secondary Market
Prices on top-quality muni bonds were unchanged on Thursday.
The yield on the 10-year benchmark general obligation remained at 1.75% from Wednesday, while the yield on 30-year GOs was flat at 2.54%, according to a final read of MMD's triple-A benchmark scale.
Treasury prices were lower on Thursday, with the two-year note yield rising to 0.52% from 0.49% on Wednesday. The 10-year yield rose to 1.77% from 1.73%, while the 30-year yield increased to 2.33% from 2.32%.
The 10-year muni to Treasury ratio decreased to 99.4% on Thursday from 101.7% on Wednesday, while the 30-year muni to Treasury ratio fell to 109.0% from 110.9%
MSRB Reports Previous Session's Activity
The Municipal Securities Rulemaking Board reported 36,331 trades on Wednesday on volume of $12.591 billion.
Most active on Wednesday, based on the number of trades, was the New York City Transitional Finance Authority, 2015 Series S-1 Building Aid revenue bond 3 1/8s of 2032, which traded 55 times with an average price of 101.406 and an average yield of 2.961%.
Muni Money Market Fund Outflows Rise to $1.53B
Tax-exempt money market fund assets dropped to $260.86 billion after $1.53 billion fled the funds in the week ended Jan. 26, according to The Money Fund Report, a service of iMoneyNet.com. The assets fell from $262.39 billion in the prior week.
The average, seven-day yield for the 396 weekly reporting tax-exempt money funds held steady at 0.01%.
The total net assets of the 994 weekly reporting taxable money funds fell $6.99 billion to $2.457 trillion in the week ended Jan. 27, down from $2.464 trillion in the prior week.
The average seven-day yield for the taxable funds was unchanged at 0.02% for the second consecutive week -- after spending 87 weeks at 0.01%.
Overall the combined total net assets of the 1,390 weekly reporting money funds declined by $8.52 billion after losses of $2.718 billion in the week ended Jan. 27. That was down from last week's total net assets of $2.727 trillion.
