A day after the market was all but waiting on the Fed, the last of the volume for the week will hit screens on Thursday.
Issuers who were brave enough to come to market the day after the Fed decision will be rewarded with historically low yields, which were achieved yesterday.
Secondary Trading
U.S. Treasuries were narrowly mixed on Thursday. The yield on the two-year Treasury was unchanged from 0.68% on Wednesday, while the 10-year Treasury yield fell to 1.55% from 1.58% and the yield on the 30-year Treasury bond decreased to 2.38% from 2.42%.
Municipals ended stronger on Wednesday. The 30-year muni general obligation yield fell one basis point to 2.17%, setting another record low after Tuesday's 2.18%, according to the final read of Municipal Market Data's triple-A scale.
The yield on 10-year benchmark muni declined one basis point to 1.47% from 1.48%, and tying its all-time low set in 2012.
The 10-year muni to Treasury ratio was calculated at 88.9% on Wednesday compared to 91.9% on Tuesday, while the 30-year muni to Treasury ratio stood at 88.1% versus 90.0%, according to MMD.
MSRB: Previous Session's Activity
The Municipal Securities Rulemaking Board reported 42,334 trades on Wednesday on volume of $15.06 billion.
Primary Market
The last of the week's supply will come on Thursday, including the deal everyone has been talking about: Illinois.
The state is putting up for competitive bid $550 million of its Series 2016 general obligation bonds. The bonds are now rated Baa2 by Moody's Investors Service and BBB-plus by S&P Global Ratings and Fitch Ratings. All three raters have negative outlooks on the credit.
Illinois last competitively sold GOs on Jan. 14, when Bank of America Merrill Lynch won $480 million Series of January 2016 GOs with a true interest cost of 3.9989%. It was the state's first sale after a 20-month hiatus, and the proceeds were to be used mostly for transportation projects. That issue was priced with a top yield of 4.27% in 2041, which was 161 basis points over the comparable maturity on MMD's triple-A scale.
Since 2006, Illinois has issued about $27.5 billion of debt, with the largest issuance occurring in 2010 when it sold $8.7 billion of securities. The Prairie State has sold more than $1 billion a year every year since 2006, except in 2007, 2008 and 2015. After staying out of the market all last year, it looks as though the state is back on track to reach the $1 billion plateau once again this year.
Also on Thursday, Citigroup is set to price the Peralta Community College District of Alameda County, Calif.'s $155 million of general obligation bonds. The deal is rated Aa3 by Moody's and triple-A by S&P.
Bank of America Merrill Lynch is expected to price the Dutchess County Local Development Corp., N.Y.'s $378.01 million of Series 2016B revenue and revenue refunding bonds for Health Quest Systems. The deal consists of $28.01 million of Series 2016A revenue refunding bonds and $350 million of Series 2016B revenue bonds. The issue is rated A3 by Moody's and A-minus by S&P.
In the short-term competitive arena, the New York Metropolitan Transportation Authority is selling $700 million of bond anticipation notes in two separate sales. The deals consist of $350 million of Series 2016A Subseries 2016A-1 dedicated tax BANs and $350 million of Series 2016A Subseries 2016A-2 dedicated tax BANs.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar increased $466.4 million to $8.29 billion on Thursday. The total is comprised of $4.03 billion of competitive sales and $4.26 billion of negotiated deals.
Tax-Exempt Money Market Funds See Outflows
Tax-exempt money market funds experienced outflows of $3.31 billion, bringing total net assets to $205.09 billion in the week ended June 13, according to The Money Fund Report, a service of iMoneyNet.com. This followed an outflow of $546.1 million to $208.41 billion in the previous week.
The average, seven-day simple yield for the 292 weekly reporting tax-exempt funds was unchanged at 0.06%.
The total net assets of the 890 weekly reporting taxable money funds decreased $4.98 billion to $2.504 trillion in the week ended June 14, after an inflow of $20.53 billion to $2.509 trillion the week before.
The average, seven-day simple yield for the taxable money funds remained at 0.11%.
Overall, the combined total net assets of the 1,182 weekly reporting money funds decreased $8.29 billion to $2.709 trillion in the period ended June 14, which followed an inflow of $19.98 billion to $2.717 trillion.
