The municipal bond market on Friday is looking ahead to the many new issues coming to market in the holiday-shortened trading week while traders keep watch as yields of top-rated munis continue to decline.
Primary Market
Some of the big deals slated for the week of Jan. 19 include the $1.75 billion offering from the Texas Transportation Commission for the Central Texas Turnpike System, consisting of first and second tier revenue refunding bonds to be priced by Barclays Capital on Thursday; the $508.475 million Alabama Federal Aid Highway Finance Authority's special obligation revenue bonds to be priced by Morgan Stanley on Wednesday; the $460.195 million competitive offering from Washington state of various purpose general obligation refunding bonds, going up for bid on Wednesday; and the $458 million Louisiana gas and fuels revenue bonds to be priced on Thursday by Citigroup Global Markets.
On Thursday, J.P. Morgan Securities repriced the New York Metropolitan Transportation Authority's $850 million transportation revenue bonds in two series.
The MTA's $600 million fixed-rate Subseries 2015A-1 bonds were priced to yield from 0.12% with a 1% coupon in 2015 to 2.92% with a 5% coupon in 2037. A 2040 term bond was priced as 5s to yield 2.97% while a 2045 term was priced as 5s to yield 3.04%. The MTA's $250 million SIFMA floating-rate Subseries 2015A-2 tender notes were priced at par to yield 58 basis points over the SIFMA rate in 2039.
The entire issue is rated A2 by Moody's Investors Service AA-minus by Standard & Poor's and A by Fitch Ratings.
Atlantic City May Sell Notes in Q1
Atlantic City, N.J., may reschedule for the first quarter a $40 million note sale that was canceled last year, according to a published report.
The city is looking for underwriters, bond counsel and other staff to work on the deal, City Revenue Director Michael Stinson was quoted as saying by Bloomberg.
The city has until March 31 to repay $40 million it borrowed from the state after it canceled an earlier, trimmed down sale. The city had originally planned a $140 million bond sale for November, then scaled it back to the smaller note sale, which was then delayed and ultimately cancelled because of concerns about the city's finances in the wake of four casino closures.
Stinson told Bloomberg the city also has $12 million in outstanding one-year bond-anticipation notes due on Feb. 1.
Secondary Market
On Friday, Treasury prices were higher, with the two-year note yield falling to 0.42% from 0.44% on Thursday. The 10-year yield was down to 1.74% from 1.77%, while the 30-year yield dropped to 2.35% from 2.41%.
On Thursday, municipal bond prices continued to show strength, traders said.
The yield on the 10-year benchmark general obligation fell three basis points to 1.75% on Thursday from 1.78% on Wednesday, while the yield on 30-year GOs fell two basis points to 2.52%, according to a final read of Municipal Market Data's triple-A benchmark scale.
On Jan. 2, the yield on the 10-year stood at 2.01% and the yield on 30-year was at 2.83%, according to the MMD scale. Thursday's levels represent a decline for the 10-year and 30-year of 26 basis points and 31 basis points, respectively, from the first trading day of the year.
On Thursday, the 10-year muni to Treasury ratio was at 98.9% compared to 96.7% on Wednesday, while the 30-year muni to Treasury ratio was at 104.7% versus 103.5%.
MSRB Reports Previous Session's Activity
The Municipal Securities Rulemaking Board reported 40,552 trades on Thursday on volume of $12.148 billion.
Most active on Thursday, based on the number of trades, was the New York City Transitional Finance Authority's building aid revenue bonds 2015 Series S-1 3 1/8s due 2032, which traded 349 times with an average price of 99.574 and an average yield of 3.157%.
Tax-Exempt Bond Funds See Inflows
Municipal bond funds which report weekly posted $688.522 billion of inflows in the week ended Jan. 14, after seeing inflows of $1.338 billion in the previous week, according to the latest Lipper data.
The four-week moving average remained positive at $669.041 million in the latest week after remaining in the green at $649.675 million in the prior week. A moving average is an analytical tool used to smooth out price moves by filtering out fluctuations.
Long-term muni bond funds saw inflows of $588.754 million in the latest week, compared to inflows of $821.434 million in the previous week. High-yield muni funds recorded inflows of $259.074 million, after seeing inflows of $336.200 million in the prior week.
Exchange-traded funds had inflows of $128.344 million, after seeing inflows of $158.198 million in the previous week.
