Muni traders will be closely eying next week’s new issue supply, which seems set to surpass this week’s rather thin calendar.
Secondary Trading
Treasury prices were higher on Friday, with the yield on the two-year Treasury note slipping to 0.73% from 0.74% on Thursday, while the 10-year yield fell to 2.18% from 2.22% and the 30-year yield decreased to 2.94% from 2.99%.
The yield on the 10-year benchmark muni general obligation on Thursday finished one basis point stronger at 2.23% from 2.22% on Wednesday, while the yield on the 30-year GO was three basis points stronger at 3.20% from 3.17%, according to the final read of Municipal Market Data's triple-A scale.
The 10-year muni to Treasury ratio was calculated on Thursday at 101.1% versus 101.9% on Wednesday, while the 30-year muni to Treasury ratio stood at 107.0% compared to 107.8%, according to MMD.
Primary Market
Topping the negotiated slate is the Texas Transportation Commission’s sale of $750 million Series 2015A general obligation mobility fund refunding bonds. The advance refunding, expected to be priced by JPMorgan Securities on Monday, is rated triple-A by Moody’s Investors Service, Standard & Poor’s and Fitch Ratings.
Barclays Capital is slated to price the Illinois Finance Authority’s $368 million of Series 2015A revenue bonds for OSF Healthcare on Wednesday. The issue is rated A2 by Moody’s and A by both S&P and Fitch.
Citigroup is set to price the Los Angeles Department of Water and Power’s $271 million of power system revenue bonds on Wednesday. The bonds are rated Aa3 by Moody’s and AA-minus by S&P and Fitch.
Citi is also expected to price Philadelphia’s $225 million of GOs on Wednesday. The issue is rated A2 by Moody’s and A-plus by S&P and Fitch.
And Citi is set to price the Illinois’ Metropolitan Pier and Exposition Authority’s $222 million of bonds for the McCormick Place expansion project. The issue is comprised of current interest bonds and capital appreciation bonds.
In the competitive arena, the state of Ohio is coming to market with three separate sales totaling about $250 million on Tuesday. The sales consist of $150 million of Series 2015B general obligation infrastructure improvement bonds, $50.49 million of Series 2015C GO infrastructure improvement refunding bonds, and $50 million of Series 2015B GO conservation projects bonds.
The issues are rated Aa1 by Moody’s and AA-plus by S&P and Fitch.
On Monday, the Johnson County Unified School District No. 229, Kan., is selling two separate sales in the competitive arena totaling about $162 million. The sales consist of $92.2 million of Series 2015A GO school bonds and $70.26 million of Series 2015B GO refunding bonds. Both issues are rated triple-A by Moody’s and AA-plus by S&P.
Municipal Bond Funds Again See Outflows
Municipal bond funds again saw outflows in the latest week, according to Lipper data released on Thursday.
Weekly reporting funds experienced $95.986 million of outflows in the week ended Sept. 9, after seeing outflows of $586.481 million in the previous week, Lipper reported.
The latest outflow brings to 19 out of 37 weeks this year that the funds have seen redemptions. Inflows for the year to date are still in the green, totaling nearly $2 billion.
The four-week moving average remained negative at $245.843 million after being in the red at $219.075 million in the previous week. The moving average has now been negative for 16 weeks in a row. A moving average is an analytical tool used to smooth out price changes by filtering out fluctuations.
Long-term muni bond funds experienced inflows, gaining $12.690 million in the latest week, after seeing outflows of $323.912 million in the previous week. Intermediate-term funds saw outflows of $9.352 million after seeing outflows of $82.230 million in the prior week.
Exchange traded funds saw inflows of $28.812 million, after experiencing outflows of $41.635 million in the previous week.
And high-yield muni funds saw outflows of $6.069 million in the latest reporting week, after seeing an outflow of $123.945 million the previous week.
In the past 20 weeks, high-yield funds have seen outflows 14 times totaling $1.945 billion and inflows six times totaling $322.011 million.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 39,366 trades on Thursday on volume of $9.684 billion.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar rose $539.9 million to $8.70 billion on Friday. The total is comprised of $3.00 billion competitive sales and $5.70 billion of negotiated deals.
