Municipal bond traders will be eying record low long-term rates on Thursday as the last of the week's larger deals come to market.
Secondary Market
U.S. Treasuries were stronger in early Thursday trading. The yield on the two-year Treasury declined to 0.76% from 0.78% on Wednesday, while the 10-year Treasury yield dropped to 1.67% from 1.70% and the yield on the 30-year Treasury bond decreased to 2.47% from 2.51%.
Long-term yields on top-rated municipal bonds continued their record breaking decline on Wednesday, according to Municipal Market Data, as the 30-year general obligation fell to another new low. The yield on the 30-year munis dropped two basis points to 2.34% from Tuesday's previous record low of 2.36%, according to the final read of MMD's triple-A benchmark scale. Tuesday's prior low on the 30-year was 2.39%, set on May 17.
The yield on 10-year benchmark muni dropped one basis point to 1.60% on Wednesday from 1.61% on Tuesday, according to MMD. It stands 13 basis points above its all-time low of 1.47% set in 2012.
The 10-year muni to Treasury ratio was calculated at 94.0% on Wednesday compared to 94.0% on Tuesday, while the 30-year muni to Treasury ratio stood at 93.2% versus 93.1%, according to MMD.
MSRB: Previous Session's Activity
The Municipal Securities Rulemaking Board reported 39,857 trades on Wednesday on volume of $16.75 billion.
Primary Market
In early activity on Thursday, Ramirez & Co. priced the Los Angeles Department of Water and Power's $225 million of Series 2016B power system revenue bonds.
The issue was priced to yield from 1.07% with a 5% coupon in 2021 to 2.34% with a 5% coupon in 2038; a 2042 maturity was priced as 5s to yield 2.38% and a split 2046 maturity was priced as 5s to yield 2.42% and as 4s to yield 2.67%. The deal is rated Aa2 by Moody's and AA-minus by S&P and Fitch.
Thursday morning, Massachusetts will competitively sell $500 million of general obligation bonds in two separate sales.
The deals consist of $450 million of Consolidated Loan of 2016 Series E GOs and $50 million of Consolidated Loan of 2016 Series D GOs.
The deals are rated Aa1 by Moody's Investors Service and AA-plus by S&P Global Ratings and Fitch Ratings.
Also on the competitive slate, South Broward Hospital District, Fla., will sell $168 million of Series 2016 hospital refunding revenue bonds. The deal is rated Aa3 by Moody's and AA by S&P.
On the negotiated slate, Loop Capital markets is expected to price Harris County, Texas' $513.92 million of Series 2016A toll road senior lien revenue refunding bonds The deal is rated Aa2 by Moody's and AA by Fitch.
JPMorgan Securities is set to price the New York City Housing Development Corp.'s $425.69 million of multi-family housing revenue sustainable neighborhood bonds. The deal, which consists of Series 2016C-1 fixed-rates, Series 2016C-2 term-rates and Series 2016E fixed-rates, is rated Aa2 by Moody's and AA-plus by S&P.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar decreased $4.27 billion to $8.63 billion on Thursday. The total is comprised of $4.60 billion of competitive sales and $4.03 billion of negotiated deals.
Tax-Exempt Money Market Funds See Outflows
Tax-exempt money market funds experienced outflows of $546.1 million, bringing total net assets to $208.41 billion in the week ended June 6, according to The Money Fund Report, a service of iMoneyNet.com. This followed an outflow of $2.45 million to $208.95 billion in the previous week.
The average, seven-day simple yield for the 297 weekly reporting tax-exempt funds was unchanged at 0.06%.
The total net assets of the 889 weekly reporting taxable money funds increased $20.53 billion to $2.509 trillion in the week ended June 7, after an outflow of $14.69 billion to $2.488 trillion the week before.
The average, seven-day simple yield for the taxable money funds remained at 0.11%.
Overall, the combined total net assets of the 1,186 weekly reporting money funds increased $19.98 billion to $2.717 trillion in the period ended June 7, which followed an outflow of $17.14 billion to $2.697 trillion.
