The municipal bond market on Friday is looking ahead of next week's new issue calendar, which is topped off by big sales in New Jersey and California.
Market participants are also eying the fate of the delayed Puerto Rico Aqueduct and Sewer Authority's $750 million bond deal.
"We are not pricing today in order to provide investors with the time they need to adequately review and analyze the materials so they can make the most informed decision about their potential investment," a spokesperson for the Puerto Rico Government Development Bank said in a statement released late Thursday.
Bank of America Merrill Lynch had no comment on the timing on the deal or details of the offering, which it had been expected to price this week.
On Friday's Bloomberg calendar, the deal is now listed as day-to-day; it is not listed on Ipreo's Dalcomp negotiated calendar.
"Next week is shaping up to be relatively busy for municipal new issuance, with $8 billion listed for sale so far, not including the $750 million Puerto Rico Aqueduct and Sewer Authority issue (Caa3/CCC-/CC) which was scheduled for this week, but is now listed as day-to-day," Janney Municipal Strategist Alan Schankel wrote in a Friday market comment. "Despite some tweaking of security features, investor interest in the PR issue is apparently lacking, notwithstanding a reported yield as high as 10% for the 30-year maturity. Perhaps investor caution derives from the backdrop of an Aug. 1 default on the Puerto Rico Public Finance Corp. and the Commonwealth's plan to present a broad debt restructuring proposal by Sept. 1."
The sale of PRASA's Series 2015A senior lien revenue bond sale would be the first for a Puerto Rico authority since the commonwealth sold $3.5 billion of general obligation bonds last year.
Primary Market
Next week, Bank of America Merrill Lynch is slated to price two deals for the New Jersey Economic Development Authority totaling $2.23 billion.
The sales consist of $1.658 billion of Series 2015 WW and XX school facilities construction refunding bonds and $574 million of Series 2015YY taxable school facilities construction refunding bonds. Both issues are rated A2 by Moody's Investors Service and A-minus by Standard & Poor's and Fitch Ratings.
Morgan Stanley is slated to price the state of California's $1.9 billion of various purpose general obligation and GO refunding bonds on Wednesday after holding a retail order period on Tuesday.
"These bonds help strengthen our communities by helping to fund the construction of roads, schools and other important infrastructure projects," state Treasurer John Chiang said in a release.
About $1.35 billion from the sale will be used to refinance existing debt with the remaining $550 million providing permanent financing for capital facilities or other voter-approved projects and public facilities.
The deal is rated Aa3 by Moody's, AA-minus by S&P and A-plus by Fitch.
Barclays Capital is expected to price Guam's $404.87 million of Series 2015D business privilege tax refunding bonds on Wednesday. The deal is rated rate A by S&P and A-minus by Fitch.
Barclays is also set to price the Connecticut Health and Educational Facilities Authority's $320 million of Series L revenue bonds for Quinnipiac University on Thursday. The bonds are rated A3 by Moody's and A-minus by S&P.
In the competitive arena, the Cobb-Marietta Coliseum and Exhibit hall Authority, Ga., is selling $372.55 million of Series 2015 taxable revenue bonds for the Cobb County Coliseum project on Tuesday. The deal is rated triple-A by Moody's, S&P and Fitch.
Secondary Trading
Treasury prices were mixed on Friday, with the yield on the two-year Treasury note falling to 0.65% from 0.67% on Thursday, while the 10-year yield fell to 2.07% from 2.08% and the 30-year yield was flat from 2.75%.
The yield on the 10-year benchmark muni general obligation on Thursday finished five basis points weaker at 2.16% from 2.21% on Tuesday, while the yield on the 30-year GO was off six basis points to 3.02% from 3.08%, 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 103.8% versus 104.0% on Wednesday, while the 30-year muni to Treasury ratio stood at 109.8% compared to 109.4%, according to MMD.
Municipal Bond Funds See Inflows
Municipal bond funds saw inflows in the latest week, according to Lipper data released on Thursday.
Funds which report weekly saw $43.656 million of inflows in the week ended Aug. 19, after seeing inflows of $11.087 million in the previous week, Lipper reported. The latest inflow brings to 18 out of 34 weeks this year that the funds have seen a cash infusion. Inflows for the year to date are still in the green, totaling $3.008 million.
The four-week moving average remained negative at $81.719 million after being in the red at $61.280 million in the previous week. The moving average has now been negative for 13 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 also experienced inflows, gaining $289.019 million in the latest week, after seeing inflows of $134.829 million in the previous week. Intermediate-term funds saw outflows of $6.790 million after seeing inflows of $8.368 million in the prior week.
Exchange traded funds saw outflows of $19.800 million, after experiencing inflows of $49.071 million in the previous week.
And high-yield muni funds saw inflows of $182.789 million in the latest reporting week, after seeing an inflow of $60.437 million the previous week.
In the past 17 weeks, high-yield funds have seen outflows 11 times totaling $1.775 billion and inflows six times totaling $322.011 million.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 37,013 trades on Thursday on volume of $9.529 billion.
The most active bond, based on the number of trades, was the Washington HealthCare Facilities Authority Series 2015A Providence Health and Services revenue 4s of 2045, which traded 103 times at an average price of 99.836, an average yield of 3.993%. The bonds were initially priced at 97.766 to yield 4.13%.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar increased $4.24 billion to $10.84 billion on Friday. The total is comprised of $2.55 billion competitive sales and $8.29 billion of negotiated deals.
