Municipal bond traders are waiting to see the largest deals of the week hit the screens on Thursday, topped by two offerings from Midwest issuers.
Secondary Market
U.S. Treasuries were stronger on Thursday. The yield on the two-year Treasury declined to 0.85% from 0.87% on Wednesday, the 10-year Treasury yield dropped to 1.74% from 1.77% and the yield on the 30-year Treasury bond decreased to 2.47% from 2.50%.
Top-quality municipal bonds ended weaker on Wednesday. The yield on the 10-year benchmark muni general obligation rose three basis points to 1.70% from 1.67% on Tuesday, while the yield on the 30-year also increased by three basis points, to 2.53% from 2.50%, 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 95.7% compared to 94.9% on Tuesday, while the 30-year muni to Treasury ratio stood at 100.9% versus 100.0%, according to MMD.
MSRB: Previous Session's Activity
The Municipal Securities Rulemaking Board reported 34,201 trades on Wednesday on volume of $10.42 billion.
Primary Market
Bank of America Merrill Lynch is slated to price the state of Illinois' $1.35 billion of Series of October 2016 general obligation refunding bonds.
The deal is rated Baa2 by Moody's Investors Service, BBB by S&P Global Ratings and BBB-plus by Fitch Ratings.
Also on Thursday, Citigroup is set to price the Great Lakes Water Authority, Mich.'s $1.32 billion deal consisting of $899 million of Series 2016 A, B, C & D water supply system senior lien and second lien revenue and revenue refunding bonds and $416 million of Series 2016 B & C sewage disposal system senior lien and second lien revenue refunding bonds.
Moody's rates the senior liens A3 and the second liens Baa1; S&P rates the senior liens A-minus and the second liens BBB-plus; and Fitch rates the senior liens A and the second liens A-minus.
Morgan Stanley is expected to price the California Department of Water Resources' $470.2 million of Series AW revenue bonds for the Central Valley water project on Thursday. The deal is rated Aa1 by Moody's.
Goldman Sachs is expected to price the Long Island Power Authority, N.Y.'s $407.78 million of Series 2016B electric system general revenue bonds on Thursday. The deal is rated A3 by Moody's and A-minus by S&P and Fitch.
Morgan Stanley is set to price Indianapolis' $223.53 million of Series 2016B water system first lien refunding revenue bonds on Thursday.
Since 2007, the Indianapolis has issued just over $1 billion of bonds with the most issuance occurring in 2008 when it sold $276 million of debt; the city did not issue any bonds in 2015.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar decreased $88.7 million to $18.27 billion on Thursday. The total is comprised of $6.06 billion of competitive sales and $12.22 billion of negotiated deals.
Tax-Exempt Money Market Fund Outflows
Tax-exempt money market funds experienced outflows of $1.96 billion, bringing total net assets to $127.35 billion in the week ended Oct. 10, according to The Money Fund Report, a service of iMoneyNet.com. This followed an outflow of $5.09 billion to $129.32 billion in the previous week.
The average, seven-day simple yield for the 243 weekly reporting tax-exempt funds rose to 0.34% from 0.32% in the previous week.
The total net assets of the 865 weekly reporting taxable money funds decreased $16.87 billion to $2.477 trillion in the week ended Oct. 11, after an outflow of $30.11 billion to $2.494 trillion the prior before.
The average, seven-day simple yield for the taxable money funds remained at 0.13%.
Overall, the combined total net assets of the 1,108 weekly reporting money funds fell $18.83 billion to $2.604 trillion in the period ended Oct. 11, which followed an outflow of $35.19 billion to $2.623 trillion.
