Municipal bond traders saw in excess of $5 billion price on Wednesday as yields rose, and they are set for another nice surge of issuance on Thursday — which will include a $1.1 billion deal from the Dormitory Authority of the State of New York.
Secondary Market
Treasuries were weaker on Thursday morning. The yield on the two-year Treasury rose to 0.85% from 0.84% on Wednesday, the 10-year Treasury yield gained to 1.72% from 1.71% and the yield on the 30-year Treasury bond increased to 2.45% from 2.43%.
Munis were weaker at Wednesday's close. The yield on the 10-year benchmark muni general obligation was five basis points higher to 1.60% from 1.55% on Tuesday, while the yield on the 30-year rose seven basis points to 2.43% from 2.36%, according to a final read of Municipal Market Data's triple-A scale.
On Wednesday, the 10-year muni to Treasury ratio was calculated at 93.3% compared to 92.2% on Tuesday, while the 30-year muni to Treasury ratio stood at 99.8% versus 98.2%, according to MMD.
MSRB: Previous Session's Activity
The Municipal Securities Rulemaking Board reported 38,697 trades on Wednesday on volume of $16.87 billion.
Primary Market
For the second day in a row, the largest deal will be greater than $1 billion, as Citi is expected to price DASNY's $1.1 billion of personal income tax revenue bonds for institutions, following a one day retail order period. The deal is rated Aa1 by Moody's Investors Service and triple-A by S&P Global Ratings.
Citi priced the bonds for retail investors on Wednesday to yield from 0.99% with a 3% coupon and 5% coupon in a split 2019 maturity to 3.07% with a 3% coupon in 2038. No retail orders were taken in the 2028 through 2030 maturities, 2032 through 2035 or 2037.
Elsewhere, JP Morgan is scheduled to price the Public Utilities Commission of the City and County of San Francisco's $859.315 million of water revenue and refundings. The deal is rated Aa3 by Moody's and AA-minus by S&P.
Since 2006, the San Francisco PUC has issued over $7 billion of bonds with the most issuance occurring in 2010 when it sold $1.7 billion of debt. The commission did not issue any bonds in 2007, 2008 or 2014.
JPM is also on the docket to price the Industrial Development Authority of the County of Maricopa, Ariz.'s $766.135 million of revenue bonds for Banner Health. The deal is rated AA-minus by S&P and Fitch Ratings.
Morgan Stanley is slated to price the Texas Transportation Commission's $599.69 million of highway fund first tier revenue bonds. The deal was originally supposed to price on Sept. 7, but was pushed back.
As far as the competitive sales, there are no scheduled bond deals larger than $100 million, although $180 million Milwaukee revenue anticipation notes will be auctioned.
Tax-Exempt Money Market Fund Outflows
Tax-exempt money market funds experienced outflows of $5.09 billion, bringing total net assets to $129.33 billion in the week ended Oct. 3, according to The Money Fund Report, a service of iMoneyNet.com. This followed an outflow of $5.13 billion to $134.40 billion in the previous week.
The average, seven-day simple yield for the 245 weekly reporting tax-exempt funds rose to 0.32% from 0.27% in the previous week.
The total net assets of the 872 weekly reporting taxable money funds decreased $30.11 billion to $2.494 trillion in the week ended Oct. 4, after an inflow of $19.63 billion to $2.524 trillion the prior before.
The average, seven-day simple yield for the taxable money funds increased to 0.13% from 0.12% from the week before.
Overall, the combined total net assets of the 1,117 weekly reporting money funds fell $35.19 billion to $2.623 trillion in the period ended Oct. 4, which followed an inflow of $14.50 billion to $2.658 trillion.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar decreased $6.11 billion to $15.47 billion on Thursday. The total is comprised of $3.65 billion of competitive sales and $11.82 billion of negotiated deals.
