The last three of the week's big issues priced on Thursday as the municipal market worked off the heavy supply that hit the screens the previous day when close to $5 billion of new issues were sold.
Most of the new deals had no problems being placed, traders said, though rising muni yields were adding a note of caution to the proceedings.
"The market has definitely run into some resistance as absolute levels are a bit too low and Treasury volatility adds to the concern of a back-off to the recent rally," said a New York trader. "New issues were placed, but without the broad-based demand we have seen the first few weeks of the year."
Yields on top-rated municipal bonds rose as much as three basis points Thursday.
Primary Market
JPMorgan priced the East Bay Municipal Utility District, Calif.'s $442.055 million of water revenue bonds for institutions after a one-day retail order period. The bonds were priced to yield from 1.59% with a 4% coupon in 2023 to 2.57% with a 5% coupon in 2037. The deal is rated Aa1 by Moody's Investors Service, AAA by Standard & Poor's and AA-plus by Fitch Ratings.
Citigroup priced the $661.82 million Louisiana gasoline and fuels tax revenue refunding bonds. The $581.925 million Series A first lien bonds were priced to yield from 2.64% with a 5% coupon in 2032 to 2.77% with a 5% coupon in 2035; a 2039 term bond was priced as 4 1/2s to yield 3.17% while a split 2041 term was priced as 4s to yield 3.30% and as 5s to yield 2.90%. The $39.895 million Series B second lien bonds were priced to yield from 1.42% with a 5% coupon in 2021 to 2.28% with a 5% coupon in 2026. The first lien bonds are rated Aa1 by Moody's and AA by S&P while the second lien bonds are rated Aa2 by Moody's and AA by S&P.
Wells Fargo priced San Antonio, Texas' $287.9 million water system junior lien revenue refunding bonds. The issue was priced to yield from 0.36% with a 5% coupon in 2015 to 2.85% with a 5% coupon in 2037; a 2040 term was priced as 5s to yield 2.91% and a 2045 term was priced as 4s to yield 3.37%. The bonds are rated Aa2 by Moody's and AA by both S&P and Fitch.
Elsewhere, several health and hospital issues were in the market.
Morgan Stanley received the written award on the Maryland Health and Higher Educational Facilities Authority's $126.67 million of revenue bonds for the Peninsula Regional Medical Center. The bonds were priced with a top yield of 3.15%. The issue is rated A2 by Moody's and A by Standard & Poor's.
JPMorgan Securities received the formal award on the Massachusetts Development Finance Agency's $267.62 million of revenue bonds for the Partners HealthCare System. The bonds were priced with a top yield of 3.59%. The issue is rated Aa3 by Moody's and AA by S&P and Fitch.
JPMorgan was also awarded the Washington Health Care Facilities Authority's $267.35 million of revenue and revenue refunding bonds for the Seattle Children's Hospital. The bonds had a top yield of 3.85%. The issue is rated Aa2 by Moody's and AA by Fitch.
Secondary Market
Prices of high-quality municipal bonds were weaker on Thursday.
The yield on the 10-year benchmark general obligation was up three basis points to 1.83% from 1.80% on Wednesday, while the yield on 30-year GOs was up three basis points to 2.62% from 2.59% on Wednesday, according to the final read of MMD's triple-A benchmark scale.
Treasury prices were lower on Thursday, with the two-year note yield up to 0.52% from 0.50% on Wednesday. The 10-year yield increased to 1.89% from 1.84%, while the 30-year yield rose to 2.47% from 2.42%.
The 10-year muni to Treasury ratio fell to 96.9% on Thursday from 97.0% on Wednesday, while the 30-year muni to Treasury ratio rose to 106.5% from 106.0%.
MSRB Reports Previous Session's Activity
The Municipal Securities Rulemaking Board reported 37,368 trades on Wednesday on volume of $7.661 billion. Most active on Wednesday, based on the number of trades, was the New Jersey Transportation Trust Fund Authority transportation program bond, Series AA 4 1/4s of 2044, which traded 84 times with an average price of 103.472 and an average yield of 3.807%.
Muni Money Funds See Outflows
Tax-exempt money market funds declined in the week ended Jan. 20, as outflows of $807.6 million caused total net assets to drop to $262.39 billion, according to The Money Fund Report, a service of iMoneyNet.com. The decrease compares to an outflow of $1.46 billion in the previous week.
The average, seven-day yield for the 396 weekly reporting tax-exempt money market funds remained unchanged at 0.01%, while the average maturity remained steady at 35 days.
The total net assets of the 993 weekly reporting taxable money market funds saw outflows of $7.02 billion in the week ended Jan. 20 as total net assets declined to $2.464 trillion; taxable funds saw inflows of $4.07 billion in the prior week.
The average, seven-day yield for the taxable money market funds rose to 0.02%, while the average maturity remained at 44 days.
Overall, the combined total net assets of the 1,389 weekly reporting money market funds declined $7.82 billion to $2.727 trillion in the week ended Jan. 20, after seeing after seeing gains of $2.61 billion in the previous week.
