The municipal bond market's primary sector is very quiet on Friday after the deluge of new issuance earlier in the week and before next week's large calendar slate. High-quality municipal bond yields were higher in secondary trading, according to Municipal Market Data.
Next Week's Primary Market
On Wednesday, Morgan Stanley is scheduled to price the Los Angeles Community College District's $1.325 billion general obligation and general obligation refunding bonds. Bank of America Merrill Lynch is slated on Tuesday to price the California Statewide Communities Development Authority's $650 million tax-exempt and taxable bonds for the Loma Linda University Medical Center.
The Harris County-Houston Sports Authority's $569 million tax-exempt and taxable senior lien revenue refunding bonds and second lien revenue refunding bonds are slated to be priced on Tuesday by Morgan Stanley. And Wells Fargo Securities is set to price Dallas' $530 million general obligation and refunding bonds on Tuesday.
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 from one to three basis points from 2.98%, according to a preliminary read of Municipal Market Data's triple-A scale.
Treasury yields were up, with the two-year note yield rising to 0.64% from 0.54% on Thursday. The 10-year yield rose to 2.32% from 2.26% while the 30-year increased to 2.98% 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, was 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.
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%.
