The municipal bond market on Thursday was prepared for the final countdown as the last of the large new issues get set to hit the screens.
Secondary Market
U.S. Treasuries were weaker on Thursday. The yield on the two-year Treasury rose to 0.69% from 0.67% on Wednesday as the 10-year Treasury yield gained to 1.54% from 1.47% and the yield on the 30-year Treasury bond increased to 2.25% from 2.18%.
Top-shelf municipal bonds finished steady to slightly stronger on Wednesday. The yield on the 10-year benchmark muni general obligation finished unchanged from 1.38% on Tuesday, while the yield on the 30-year muni fell one basis point to 2.01% from 2.02%, according to the final read of Municipal Market Data's triple-A scale.
On Wednesday, the 10-year muni to Treasury ratio was calculated at 94.1% compared to 91.3% on Tuesday, while the 30-year muni to Treasury ratio stood at 92.4% versus 90.5%, according to MMD.
MSRB: Previous Session's Activity
The Municipal Securities Rulemaking Board reported 35,731 trades on Wednesday on volume of $11.53 billion.
Primary Market
In the competitive sector, Wichita, Kan., is selling two separate issues totaling about $129 million consisting of $103.06 million of Series 2016B water and sewer utility refunding revenue bonds and $26.09 million of Series 2016A water and sewer utility revenue bonds.
Both deals are rated AA-minus by S&P Global Ratings.
On Wednesday, Estrada Hinojosa priced the Board of Regents of the Texas A&M University System's $139.35 million of Series 2016E revenue financing system bonds.
The issue was priced to yield 0.64% with a 2% coupon in 2017 and from 0.84% with a 5% coupon in 2020 to 2.31% with a 4% coupon in 2035.
The deal is rated triple-A by Moody's Investors Service, S&P and Fitch Ratings.
Since 2006, the Board of Regents of the Texas A&M University System has issued about $4.4 billion of debt, with the largest issuance occurring in 2009 when it sold $924 million of securities.
Late Wednesday, Morgan Stanley won the Palm Springs Unified School District, Calif.'s $100 million of 2008 Election Series D bonds with a true interest cost of 2.398%.
The issue was priced to yield from 0.70% with a 2% coupon in 2017 to 2.787% with a 2.75% coupon in 2033. The deal is rated Aa3 by Moody's and A-plus by S&P.
The New York City Transitional Finance Authority on Wednesday said it accepted $175 million of retail orders on its $800 million of future tax secured fixed-rate subordinate bonds tax-exempt new money bonds during a two-day retail order period. The issue was priced by Siebert Brandford Shank & Co.
The TFA said that for the institutional pricing "strong investor demand made it possible to reduce yields by up to five basis points in 11 maturities. Final stated yields on the tax-exempt bonds varied by coupon and maturity, ranging from 0.60% in 2018 to 2.24% in 2040 for a 5.0% premium coupon bond and 2.51% in 2042 for a 4.0% coupon bond."
The TFA also competitively sold $250 million of taxable fixed-rate bonds. RBC Capital Markets won the $186.9 million of Fiscal 2017 Series A Subseries A-2 future tax secured bonds with a true interest cost of 1.98%, while Bank of America Merrill Lynch won the $63.1 million of Fiscal 2017 Series A Subseries A-3 future tax secured bonds with a TIC of 2.58%.
The bonds are rated Aa1 by Moody's and triple-A by S&P and Fitch; all three agencies have a stable outlook on the credit.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar decreased $2.63 billion to $10.01 billion on Thursday. The total is comprised of $3.55 billion of competitive sales and $6.45 billion of negotiated deals.
Tax-Exempt Money Market Funds See Outflows
Tax-exempt money market funds experienced outflows of $4.29 billion, bringing total net assets to $189.67 billion in the week ended July 11, according to The Money Fund Report, a service of iMoneyNet.com. This followed an outflow of $945.1 million to $193.96 billion in the previous week.
The average, seven-day simple yield for the 274 weekly reporting tax-exempt funds fell to 0.06% from 0.07% the previous week.
The total net assets of the 885 weekly reporting taxable money funds increased $22.22 billion to $2.510 trillion in the week ended July 12, after an outflow of $24.83 billion to $2.488 trillion the prior before.
The average, seven-day simple yield for the taxable money funds declined to 0.11% from 0.12% the week before.
Overall, the combined total net assets of the 1,159 weekly reporting money funds increased $17.92 billion to $2.700 trillion in the period ended July 12, which followed an outflow of $25.77 billion to $2.682 trillion.
