The municipal bond market on Thursday is working off the heavy supply that hit the screens on Wednesday when close to $5 billion of new issues were priced.
Prices of top-rated municipal bonds were weaker at mid-session, traders said, as yields strengthened as much as three basis points.
Primary Market
Morgan Stanley received the written award on the Maryland Health and Higher Educational Facilities Authority's $126.67 million of revenue bonds, Peninsula Regional Medical Center issue. The bonds were priced to yield from 0.30% with a 3% coupon in 2015 to 3.07% with a 5% coupon in 2039; a 2045 term bond was priced as 5s to yield 3.15%. The issue is rated A2 by Moody's Investors Service and A by Standard & Poor's.
J.P. Morgan Securities received the formal award on the Washington Health Care Facilities Authority's $267.35 million of revenue and revenue refunding bonds for the Seattle Children's Hospital. The $100 million Series A revenue bonds were priced in a split 2045 maturity as 5s to yield 3.10% and as 4s to yield 3.85%. The $167.35 million Series B refunding revenue bonds were priced to yield from 0.41% with a 2% coupon in 2016 to 2.67% with a 5% coupon in 2030; a 2035 term bond was priced as 5s to yield 2.94% and a split 2038 maturity was priced as 5s to yield 3% and 3.25%. The issue is rated Aa2 by Moody's and AA by Fitch Ratings.
Secondary Market
Prices of high-quality municipal bonds were weaker at midday. The yield on the 10-year benchmark general obligation was up from one to three basis points from 1.80% on Wednesday, while the yield on 30-year GOs was stronger by as much as two basis points from 2.59% on Wednesday according to a read of MMD's triple-A benchmark scale.
Treasury prices were mostly lower on Thursday, with the two-year note yield unchanged at 0.50% from Wednesday. The 10-year yield increased to 1.86% from 1.84%, while the 30-year yield rose to 2.45% from 2.42%.
On Wednesday, the 10-year muni to Treasury ratio fell to 97.0% from 97.7% on Tuesday, while the 30-year muni to Treasury ratio slipped to 106.0% from 106.1%.
MSRB Reports Previous Session's Activity
The Municipal Securities Rulemaking Board reported 37,368 trades on Wednesday on volume of $7.661 billion.
Most active on Wednesday, based on the number of trades, was the New Jersey Transportation Trust Fund Authority transportation program bond, Series AA 4 1/4s of 2044, which traded 84 times with an average price of 103.472 and an average yield of 3.807%.
Muni Money Funds See Outflows
Tax-exempt money market funds declined in the week ended Jan. 20, as outflows of $807.6 million caused total net assets to drop to $262.39 billion, according to The Money Fund Report, a service of iMoneyNet.com. The decrease compares to an outflow of $1.46 billion in the previous week.
The average, seven-day yield for the 396 weekly reporting tax-exempt money market funds remained unchanged at 0.01%, while the average maturity remained steady at 35 days.
The total net assets of the 993 weekly reporting taxable money market funds saw outflows of $7.02 billion in the week ended Jan. 20 as total net assets declined to $2.464 trillion; taxable funds saw inflows of $4.07 billion in the prior week.
The average, seven-day yield for the taxable money market funds rose to 0.02%, while the average maturity remained at 44 days.
Overall, the combined total net assets of the 1,389 weekly reporting money market funds declined $7.82 billion to $2.727 trillion in the week ended Jan. 20, after seeing after seeing gains of $2.61 billion in the previous week.
