Muni market sees Conn., PFA sell bonds
Municipal bond buyers saw a chunky calendar come to life on Wednesday with issuers from Connecticut, California and Cincinnati come to market with large deals.
The Federal Open Market Committee meeting yielded no surprises. In a unanimous vote, the panel left rates at a range of 1.5% to 1.75%, and offered predictions of the rate holding at that level through next year.
“The bar to a resumption of rate hikes is high, while a further cut will require a renewed deterioration in the economic outlook and/or increased market uncertainty (possibly triggered by a resumption of negative trade war headlines),” said Lee Ferridge, head of macro strategy for North America at State Street.
The Summary of Economic Projections suggests rates will rise once each in 2021 and 2022, with employment at 4.1% and GDP growing near 2% a year, and inflation rising to 2% in 2020.
Citigroup priced for retail Connecticut’s $893.75 million of Series 2020A general obligation bonds and Series 2020B GO refunding bonds.
Citi also priced the California Housing Finance Agency’s (NR/BBB+/NR/NR) $441.353 million of Series 2019-2 Class A tax-exempt municipal certificates not subject to the alternative minimum tax.
Citi received the written award on the Public Finance Authority’s (NR/BB/NR/NR) $243.315 million of revenue bonds for the Ultimate Medical Academy project, consisting of $167.705 million Series 2019A bonds and $75.61 million of taxable Series 2019B bonds.
RBC Capital Markets priced the North Carolina Housing Finance Agency’s (Aa1/AA+/NR/NR) $150 million of Series 43 homeownership revenue bonds.
JPMorgan Securities priced Osceola County, Fla’s (NR/BBB+/BBB-/NR) $319.176 million of Series 2019A-1 transportation improvement and refunding revenue bonds and Series 2019A-2 transportation improvement and refunding revenue capital appreciation bonds for the Osceola Parkway.
JPMorgan held a second day of retail orders for retail the New York City Transitional Finance Authority’s (Aa1/AAA/AAA/NR) $850 million of future tax-secured subordinate bonds, Fiscal 2020 Series B Sub-Series B-1 tax-exempts. The bonds will be priced for institutions on Thursday.
In the competitive arena, Cincinnati, Ohio, (Aa2/AA/NR/NR) sold $100.205 million of unlimited tax GO various purpose bonds. Robert W. Baird won the issue with a true interest cost of 2.0158%. Davenport & Co was the financial advisor; Dinsmore & Shohl was the bond counsel. Proceeds will be used to finance various capital improvements, purchase vehicles and refund certain outstanding bond anticipation notes.
Goldman Sachs received the official award on the Foothill/Eastern Transportation Corridor Agency’s (Baa2/A-/BBB/NR) $897.055 million of taxable Series 2019A toll road refunding revenue bonds. The $160 million 2049 maturity and the $374.83 million 2053 maturity (A2/AA/NR/NR) were insured by Assured Guaranty Municipal while the $362.225 million 2049 maturity was uninsured.
In late activity, the uninsured 4.094s of 2049 priced at par were trading at a high price of 101.118 cents on the dollar in 28 trades totaling $83.5 million. The AGM insured 3.824s of 2049 priced at par were trading at a high price of 101.355 cents on the dollar in two trades totaling $3 million.
Munis were mixed on the MBIS benchmark scale, with yields rising by one basis point in the 10-year maturity and falling by one basis point in the 30-year. High-grades were also mixed, with yields on MBIS AAA scale rising by one basis point in the 10-year and the 30-year remained unchanged.
On Refinitiv Municipal Market Data’s AAA benchmark scale, the yield on the 10-year GO fell three basis points to 1.42% while the 30-year dropped two basis point to 2.02%.
“The ICE muni yield curve is down one to two basis points,” ICE Data Services said in a Wednesday market comment. “Tobacco bonds are unchanged, but high-yield is down one basis point. Taxables are two basis points lower.”
The 10-year muni-to-Treasury ratio was calculated at 79.5% while the 30-year muni-to-Treasury ratio stood at 91.1%, according to MMD.
Stocks were little changed as Treasuries strengthened.
The Dow Jones Industrial Average was up about 0.02% as the S&P 500 Index inched up 0.02% while the Nasdaq gained 0.04%.
The Treasury three-month was yielding 1.569%, the two-year was yielding 1.626%, the five-year was yielding 1.648%, the 10-year was yielding 1.805% and the 30-year was yielding 2.232%.
Previous session's activity
The MSRB reported 34,459 trades Tuesday on volume of $11.61 billion. The 30-day average trade summary showed on a par amount basis of $11.48 million that customers bought $6.28 million, customers sold $3.17 million and interdealer trades totaled $2.03 million.
California, Texas and New York were most traded, with the Golden State taking 14.415% of the market, the Empire State taking 12.349% and the Lone Star State taking 10.781%.
The most actively traded security was the Miami-Dade County, Fla., Series 2019B water and sewer revenue 4s of 2049, which traded 11 times on volume of $40.16 million.
ICI: Muni funds see $2.71B inflow
Long-term municipal bond funds and exchange-traded funds saw a combined inflow of $2.732 billion in the week ended Dec. 4, the Investment Company Institute reported on Wednesday.
It was the 48th straight week of inflows into the tax-exempt mutual funds and followed a revised inflow of $2.668 billion in the previous week.
Long-term muni funds alone saw an inflow of $1.739 billion after a revised inflow of $2.299 billion in the previous week; ETF muni funds alone saw an inflow of $534 million after a revised inflow of $369 million in the prior week.
Taxable bond funds saw combined inflows of $9.766 billion in the latest reporting week after revised inflows of $5.998 billion in the previous week.
ICI said the total combined estimated inflows from all long-term mutual funds and ETFs were $9.836 billion after inflows of $8.189 billion in the prior week.
Gary Siegel contributed to this report.
Data appearing in this article from Municipal Bond Information Services, including the MBIS municipal bond index, is available on The Bond Buyer Data Workstation. Click here for a brief tour of the Workstation.