The municipal bond market on Thursday is digesting the relatively hefty new issuance that hit the screens this week while eying the recent rally in muni prices that has left yields markedly lower this week.
The New York City Transitional Finance Authority's $750 million building air revenue bond issue wrapped up on Wednesday, seeing such good demand that underwriters were able to slash yields.
"The TFA received approximately $1.7 billion of priority orders from institutional investors on the approximately $579 million of bonds offered to institutions," the authority said in a press release. During the two-day order period for mom and pop investors, the TFA received about $354 million of retail orders for the bonds.
Primary Market
Barclays Capital priced the Los Angeles County Public Works Financing Authority, Calif.'s $153.94 million lease revenue bonds for multiple capital projects. The issue was priced to yield from 0.43% with a 3% coupon in 2016 to 2.95% with a 5% coupon in 2034; a 2039 term bond was priced as 5s to yield 3% while a 2044 term was priced as 5s to yield 3.06%. The bonds are rated A1 by Moody's Investors Service, AA by Standard & Poor's, and A-plus by Fitch Ratings.
Morgan Stanley received the written award on the Oregon Department of Transportation's $383.15 million highway user tax revenue bonds, senior lien refunding bonds. The issue was priced to yield from 1.08% with a 4% coupon in 2019 to 2.79% with a 4% coupon in 2033. The bonds are rated Aa1 by Moody's, triple-A by S&P and AA-plus by Fitch.
Secondary Market
Treasury prices were mixed on Thursday, with the two-year note yield falling to 0.48% from 0.49% on Wednesday. The 10-year yield was unchanged at 1.84%, while the 30-year yield rose to 2.47% from 2.45%.
Prices of top-quality municipal bonds were stronger on Wednesday. The yield on the benchmark 10-year general obligation fell six basis points to 1.78% from 1.84% on Tuesday, while the yield on 30-year GOs fell eight basis points to 2.54% from 2.62%, according to the final read of Municipal Market Data's triple-A scale.
On Wednesday, the 10-year muni to Treasury ratio was at 96.7% compared to 97.6% on Tuesday, while the 30-year muni to Treasury ratio was at 103.5% versus 105.7%.
MSRB Reports Previous Session's Activity
The Municipal Securities Rulemaking Board reported 39,457 trades on Wednesday on volume of $11.889 billion.
Most active on Wednesday, based on the number of trades, was the New Jersey Transportation Trust Fund Authority transportation program bonds, Series AA 4 1/4s of 2044, which traded 87 times with an average price of 103.352 and an average yield of 3.822%.
Tax-Exempt Money Market Funds See Outflows
Tax-exempt money market funds experienced an outflow of $1.463 billion, bringing their total net assets to $263.194 billion in the week ended Jan. 13, according to The Money Fund Report, a service of iMoneyNet.com. The funds saw $4.371 billion of inflows in the prior week.
The average seven-day yield for the 396 weekly reporting tax-exempt money funds held steady at 0.1%, while the average maturity decreased by one day to 35 days compared to the previous week.
