The municipal bond market will be relatively quiet on Friday after the deluge of new issuance earlier in the week and before next week's large calendar slate.
There are about $11.8 billion of municipal bond sales scheduled for next week, according to Ipreo and The Bond Buyer Negotiated bond deals scheduled for next week total $10.0 billion, competitive sales for next week total $1.8 billion.
Next Week's Primary Market
Morgan Stanley is scheduled to price the Los Angeles Community College District's $1.5 billion general obligation and general obligation refunding bonds.
Bank of America Merrill Lynch is slated to price the $650 million California Statewide Communities Development Authority's tax-exempt and taxable bonds for the Loma Linda University Medical Center.
Morgan Stanley is scheduled to price the Harris County-Houston Sports Authority's $569 million tax-exempt and taxable senior lien revenue refunding bonds and second lien revenue refunding bonds.
Wells Fargo Securities is set to price Dallas' $530 million general obligation and refunding bonds.
Bank of America Merrill Lynch is slated to price the San Francisco Bay Area Toll Authority's $431 million toll revenue bonds. The authority is also selling $300 million toll bridge revenue bonds to be priced by Citigroup Global Markets.
Secondary Market Trading
On Friday, high-grade municipal bond yields were higher. The yield on the benchmark 10-year general obligation was up from one to three basis points from 2.06% at Thursday's close while the yield on 30-year GOs was up by as much as a basis point from 2.98%, according to a preliminary read of Municipal Market Data's triple-A scale.
Treasury yields were mixed on Friday, with the two-year note yield rising to 0.62% from 0.54% on Thursday. The 10-year yield rose to 2.29% from 2.26% while the 30-year declined to 2.95% from 2.96% on Thursday.
On Thursday, the 10-year muni-to-Treasury ratio closed at 91.6% versus 91.1% on Wednesday; the 30-year muni to Treasury ratio closed at 101.0%, compared with 101.0% on Wednesday.
MSRB: Previous Session's Activity
The Municipal Securities Rulemaking Board reported 45,336 trades on Thursday for volume of $17.588 billion.
Most active on Thursday, based on the number of trades, were the Maryland State Transportation Authority's facilities charge AMT revenue bond 4s of 2034, which traded 309 times with an average price of 99.94 for an average yield of 3.998%.
Muni Bond Funds See Inflows, Lipper Reports
U.S. municipal bond funds reported a large cash inflow for the week ended Dec. 3, according to Lipper data released on Thursday.
Muni bond funds posted $172.689 million of net inflows in the latest reporting week after recording net inflows of $563.963 million in the previous week, according to Lipper FMI.
The four-week moving average was positive at $493.911 million in the latest week.
Long-term muni bond funds saw inflows of $36.766 million in the latest week, compared to inflows of $266.562 million in the previous week. High-yield muni funds recorded inflows of $117.377 million after inflows of $162.399 million the previous week. Exchange-traded funds had inflows of $9.019 million, after inflows of $40.320 million the previous week. Municipal bond funds are popular with individual investors and they have poured money into the funds in 42 of the 48 weeks of the year.
Long-Term Municipal Mutual Funds See Inflows
Long-term municipal bond mutual funds reported $769 million of inflows for the week ended Nov. 25, according to the Investment Company Institute. This compares to inflow of $771 million in the previous week.
Taxable bond funds saw inflows of $2.590 billion versus inflows of $1.758 billion for the previous week, ICI reported. This brought total bond fund inflows to $2.59 billion for the week ended Nov. 25 compared to inflows of $2.530 billion in the previous week, ICI said.
Muni Money Funds Dip at Year End
Tax-exempt money market funds saw $800,000 of outflows in the week ended Dec. 1 with total net assets dipping to $252.65 billion, according to The Money Fund Report, a service of iMoneyNet.com.
The outflows compared to the prior week's arrival of $287.7 million when total net assets rose to $252.70 billion.
The average seven-day yield for the 407 weekly reporting tax-exempt money funds was unchanged at 0.01%, while the average maturity declined by one day to 39 days.
In contrast, the ICI reported that assets of tax-exempt money market funds rose 3.4% to $255.770 billion in the week ended Dec. 3. Retail assets rose 1.47% to $185.500 billion while institutional assets gained 1.87% to $70.270 billion, ICI said.
Bond Buyer Indexes Fall
The Bond Buyer's 20-Bond GO Index of 20-year general obligation yields dropped to its lowest level in more than a year as it fell 11 basis points in the week ended Dec. 3 to 3.83% from 3.94% in the previous week. The last time the index was lower was on May 16, 2013, when it stood at 3.61%.
The 11-Bond GO Index of higher-grade 20-year GO yields also lost 11 basis points, to 3.68% from 3.79% the previous week. It is also at its lowest level in more than a year; it stood at 3.60% on May 30, 2013.
The Bond Buyer's 25-bond Revenue Bond Index dropped eight basis points to 4.50% from 4.58% the previous week. It is at its lowest level since Oct. 23 when it was 4.49%.
The weekly average yield to maturity of the Bond Buyer Municipal Bond Index, which is based on 40 long-term bond prices, fell five basis points to 4.35% from 4.40% for the week ending Dec. 4.
