The municipal bond market on Friday is looking ahead to next week's $8.69 billion supply slate, which is topped by a $1.4 billion note sale from the city of Los Angeles in the short-term sector and a $939 million Massachusetts general obligation bond sale on the long-term calendar.
Primary Market
There are $7.16 billion of negotiated sales scheduled for next week and $1.53 billion of competitive sales.
Stifel is set to price the city of Los Angeles' $1.39 billion of Series 2015 tax and revenue anticipation notes on Wednesday. The TRANs are rated MIG1 by Moody's Investors Service and SP1-plus by Standard & Poor's.
Bank of America Merrill Lynch is slated to price the Massachusetts GOs, consolidated loan of 2015, as Series C refunding bonds and Series 2015 A bonds on Tuesday after a one-day retail order period on Monday. The GOs are rated Aa1 by Moody's and AA-plus by S&P and Fitch Ratings.
BAML will also price FirstEnergy Nuclear Generation Corp.'s $296 million of pollution control revenue refunding bonds on Wednesday. The bonds are rated Baa3 by Moody's and BBB-minus by S&P.
Citi is set to price the Philadelphia Authority for Industrial Development's $273 million of revenue bonds for Temple University. The bonds, slated for sale on Tuesday, are rated Aa3 by Moody's and A-plus by S&P.
BAML is slated to price the Maryland Health and Higher Educational Facilities Authority's $263 million of Series 2015 revenue bonds for the Meritus Medical Center. The deal will have a retail order period on Wednesday. The bonds are rated BBB by S&P and Fitch.
Stifel is expected to price the Industry Public Facilities Authority, Calif.'s $250 million of Series 2015B taxable tax allocation refunding bonds for the Industrial Redevelopment Project No. 2 on Thursday, The deal is rated A-minus by S&P.
The largest sale on the competitive calendar is Tuesday's offering from Seattle, Wash. The city is selling $164 million of Series 2015A municipal light and power revenue bonds. The issue is rated Aa2 by Moody's and AA by S&P.
The last time the city competitively sold comparable bonds was on Oct. 22, 2014 when Wells Fargo Securities won $265.21 million of Series 2014 municipal light and power improvement and refunding revenue bonds with a true interest cost of 3.096%.
Secondary Market
Prices of top-quality municipal bonds are higher.
The yield on the 10-year benchmark muni general obligation was down from one to three basis points from 2.30% on Thursday, while the yield on the 30-year GO was off from one to three basis points from 3.29%, according to a read of Municipal Market Data's triple-A scale.
Treasury prices were higher on Friday with the yield on the two-year Treasury note falling to 0.62% from 0.64% on Thursday, while the 10-year yield dropped to 2.27% from 2.35% and the 30-year yield decreased to 3.06% from 3.13%.
The 10-year muni to Treasury ratio was calculated on Thursday at 97.9% versus 99.3% on Wednesday, while the 30-year muni to Treasury ratio stood at 104.8% compared to 106.5%, according to MMD.
Municipal Bond Funds See Outflows for 7th Straight Week
For the seventh week in a row, municipal bond funds reported outflows, bringing to 10 out of 25 weeks this year the funds have suffered cash withdrawals.
The weekly reporting funds saw $420.844 million of outflows in the week ended June 17, after experiencing outflows of $411.755 million in the previous week, according to the latest Lipper data.
The four-week moving average remained negative at $354.647 million after being in the red at $272.198 million in the previous week. The moving average has been negative for three weeks in a row. A moving average is an analytical tool used to smooth out price changes by filtering out fluctuations.
Long-term muni bond funds also experienced outflows, losing $197.404 million in the latest week, after seeing outflows of $264.597 million in the previous week. Intermediate-term funds recorded outflows of $15.216 million after seeing outflows of $48.402 million in the prior week.
High-yield muni funds saw an outflow of $161.877 million in the latest reporting week, after seeing an outflow of $241.843 million the previous week. Exchange traded funds saw inflows of $3.186 million, after experiencing outflows of $2.522 million in the previous week, according to Lipper.
The Week's Most Actively Quoted Issues
Illinois and Puerto Rico issues were among the most actively quoted in the week ended June 19, according to data released by Markit.
On the bid side, the Illinois taxable 5.1s of 2033 were quoted by eight unique dealers. On the ask side, the Puerto Rico commonwealth GO 8s of 2035 were quoted by 13 dealers. And among two-sided quotes, the Puerto Rico commonwealth GO 8s of 2035 were quoted by nine dealers, Markit said.
The Week's Most Actively Traded Issues
Some of the most actively traded issues in the week ended June 19 were in New York, Los Angeles and Puerto Rico names, according to Markit.
In the revenue bond sector, the New York City Transitional Finance Authority's BARB 4s of 2044 were traded 73 times. In the GO bond sector, the Puerto Rico commonwealth GO 8s of 2035 were traded 37 times. And in the taxable bond sector, the Los Angeles Unified School District's 5.981s of 2027 were traded 13 times, according to Markit.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 42,620 trades on Thursday on volume of $11.714 billion. The most active bond, based on the number of trades, was the New York City Transitional Finance Authority's Fiscal 2015 Series S-2 building and revenue bonds 4s of 2044, which traded 343 times at an average price of 99.498 with an average yield of 4.03%. The bonds were initially priced at 99.625 to yield 4.022%.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar increased $1.64 billion to $12.16 billion on Friday. The total is comprised of $2.70 billion competitive sales and $9.47 billion of negotiated deals.
