Municipal bond traders were looking ahead to Thursday's competitive sale of almost $500 million state of Illinois general obligation bonds.
Secondary Market
Treasuries were lower on Thursday. The yield on the two-year Treasury rose to 0.91% from 0.90% on Wednesday, while the 10-year Treasury yield gained to 2.09% from 2.05% and the 30-year Treasury bond yield increased to 2.85% from 2.84%.
Top-quality municipal bonds finished steady to stronger on Wednesday. The yield on the 10-year benchmark muni general obligation was unchanged from 1.78% on Tuesday, while the 30-year muni yield fell one basis point to 2.72% from 2.73%, according to the final read of Municipal Market Data's triple-A scale.
The 10-year muni to Treasury ratio was calculated on Wednesday at 84.5% compared with 84.8% on Tuesday, while the 30-year muni to Treasury ratio stood at 94.9% versus 94.8%, according to MMD.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 41,133 trades on Wednesday on volume of $11.93 billion.
Primary Market
The state of Illinois is competitively selling $480 million of Series of 2016 GOs, its first bond issuance since 2014.
The deal is rated Baa1 by Moody's Investors Service, A-minus by S&P and triple-B-plus by Fitch.
The last time the state competitively sold comparable bonds was on April 10, 2014, when Bank of America Merrill Lynch won $250 million GOs with a TIC of 4.08%.
Since 2006, Illinois has sold about $27 billion of bonds, with the most issuance occurring in 2010 and 1012 when it issued $8.68 billion and $5.11 billion, respectively. The state did not sell any bonds in 2015.
"After a relatively strong reception for $500 million Chicago GO (NR/BBB+/BBB+) earlier this week, Illinois (Baa1/A-/BBB+), the only state with ratings below the A category, hits the competitive market today with a $480 million sale," Alan Schankel, Municipal Strategist at Janney, wrote in a Thursday market comment.
Goldman, Sachs is set to price the New Jersey Turnpike Authority's $149 million of revenue bonds on Thursday. Proceeds of the sale are expected to refund all or part of its outstanding Series 2004B bonds.
The issue is rated A3 by Moody's, A-plus by S&P and A by Fitch.
Goldman is lead underwriter of a syndicate that includes PNC Capital Markets, RBC Capital Markets and Wells Fargo Securities. The financial advisor is First Southwest with Wilentz, Goldman & Spitzer as bond counsel.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar rose $780.4 million to $8.90 billion on Thursday. The total is comprised of $4.38 billion competitive sales and $4.52 billion of negotiated deals.
Tax-Exempt Money Market Funds Post Inflows
Tax-exempt money market funds experienced inflows of $416.1 million, bringing total net assets to $257.12 billion in the week ended Jan. 11, according to The Money Fund Report, a service of iMoneyNet.com. This followed an inflow of $2.54 billion to $256.71 billion in the previous week.
The average, seven-day simple yield for the 359 weekly reporting tax-exempt funds remained at 0.01% for the 141st straight week.
The total net assets of the 941 weekly reporting taxable money funds increased $11.48 billion to $2.504 trillion in the week ended Jan. 12, after an outflow of $16.06 billion to $2.492 trillion the prior week.
The average, seven-day simple yield for the taxable money funds increased to 0.07% from 0.06% in the prior week.
Overall, the combined total net assets of the 1,300 weekly reporting money funds rose $11.90 billion to $2.761 trillion in the period ended Jan. 12, which followed an outflow of $13.51 billion to $2.749 trillion in the prior week.
