Municipal bond market participants are still recovering from a crazy week in which yields saw a 22 basis point jump in a single trading session on Monday, ruining what was supposed to be a busy week in the market with a lot of new issuance.
Secondary Market
U.S. Treasuries were mostly stronger on Friday morning. The yield on the two-year was flat at 1.03% from Thursday, the 10-year Treasury was lower at 2.27% from 2.28%, while the yield on the 30-year Treasury bond decreased to 2.97% from 2.99%.
Munis were mostly steady on Thursday, though five maturities on the front end of the curve increased by as many as three basis points. The yield on the 10-year benchmark muni general obligation was steady from 2.21% on Wednesday, while the yield on the 30-year was unchanged at 3.01%, according to a final read of Municipal Market Data's triple-A scale.
The 10-year muni to Treasury ratio was calculated at 97.2% on Thursday compared to 99.5% on Wednesday, while the 30-year muni to Treasury ratio stood at 100.7% versus 102.9%, according to MMD.
Lipper: Muni Bond Funds See Outflows
Municipal bond funds reversed course as investors pulled cash out, according to Lipper data released late Thursday.
Weekly reporters saw $3.011 billion of outflows in the week ended Nov. 16, after inflows of $62.837 in the previous week. This is the biggest outflow in more than three years, according to the release.
The four-week moving average fell to negative $734.368 million after first turning red at $15.457 million in the previous week. A moving average is an analytical tool used to smooth out price changes by filtering out fluctuations.
Long-term muni bond funds experienced outflows, losing $2.585 billion in the latest week after inflows of $19.396 million in the previous week. Intermediate-term funds had outflows of $332.967 million after inflows of $17.055 million in the prior week.
National funds had outflows of $2.685 billion after inflows of $57.695 million in the previous week. High-yield muni funds reported outflows of $1.585 billion in the latest reporting week, after outflows of $32.095 million the previous week. This is the biggest on record outflow for the high-yield sector, according to Lipper.
Exchange traded funds saw outflows of $212.832 million, after inflows of $25.475 million in the previous week.
Primary Market
The market this week only saw a fraction of deals it was supposed to see, as rising yields caused a lot of issues to move transactions to the day-to-day calendar. Although yields calmed down as the week went on, the 22 basis point jump on Monday put a damper on issuance.
Among deals placed on day-to-day status were $1.024 billion of New York's Tobacco Settlement bonds, Katy, Texas, Independent School District's $225 million of refunding bonds, Public Hospital District No. 1 of King County, Wash.'s $186 million of limited tax general obligation bonds, Montgomery County Municipal Utility District No. 13, Texas' $141 million of road and limited tax refunding bonds and Mississippi's $223 million of GO refunding bonds.
A few issuers tested the waters despite market conditions.
Wells Fargo priced the city of Richmond, Va.'s $502.260 million of public utility revenue and refunding bonds on Tuesday.
Citi priced the Alabama Federal Aid Highway Finance Authority's $236.395 million of special obligation revenue bonds.
Morgan Stanley priced the Board of Governors of the University of North Carolina at Chapel Hill Hospital's $99.945 million of revenue bonds.
In the competitive arena, the Washington Suburban Sanitary District, Md., sold $381.81 million of consolidated public improvement bonds.
The commonwealth of Massachusetts sold $200 million of transportation fund revenue bonds for the rail enhancement and accelerated bridge programs.
The Board of Trustees for the University of Alabama at Birmingham sold two issues totaling roughly $116.54 million.
On Wednesday, Morgan Stanley priced the Salt River Project Agricultural Improvement and Power District, Az.'s $767.82 million of electric system refunding revenue bonds.
Raymond James priced the city of Columbia, S.C., Waterworks and Sewer System's $122.295 million of refunding revenue bonds.
Morgan Stanley also priced Cincinnati, Ohio's $120.02 million of water system refunding and revenue bonds.
On Thursday, Bank of America Merrill Lynch priced the Los Angeles County Metropolitan Transportation Authority's $513.99 million of measure R senior sales tax revenue bonds.
Barclays priced the Massachusetts Development Finance Agency's $207.56 million of revenue bonds for Emerson College.
RBC Capital Markets priced the city and county of Denver, Colo.'s Department of Aviation Airport System's $257.905 million of revenue bonds.
Morgan Stanley priced Bexar County, Texas's $112.23 million of combination tax and revenue certificates of obligation.
In the competitive arena, Clark County, Nev., sold three issues totaling roughly $362.895 million and the state of New Hampshire sold a total of $113.52 million in two separate sales
MSRB: Previous Session's Activity
The Municipal Securities Rulemaking Board reported 50,828 trades on Thursday on volume of $15.325 billion.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar decreased $2.553 billion to $6.74 billion on Friday. The total is comprised of $2.06 billion of competitive sales and $4.68 billion of negotiated deals.
