Municipals were firm on Thursday as the last of the week’s deals hit the market.
Muni money market funds see outflow
Tax-free municipal money market fund assets decreased $92.5 million, lowering their total net assets to $138.68 billion in the week ended April 1, according to the Money Fund Report, a service of iMoneyNet.com.
The average seven-day simple yield for the 190 tax-free and municipal money-market funds slipped to 1.12% from 1.13% last week.
Taxable money-fund assets rose $10.06 billion in the week ended April 2, bringing total net assets to $2.982 trillion.
The average, seven-day simple yield for the 806 taxable reporting funds increased to 2.09% from 2.07% last week.
Overall, the combined total net assets of the 996 reporting money funds increased $10.15 billion to $3.067 trillion in the week ended April 2. It marks the 13th consecutive week total money-fund assets have exceeded $3 trillion.
The first quarter has been good for municipal bond investors, according to Alan Schankel, managing director at Janney.
"The municipal sector performance has been strong, with its 2.90% first-quarter return beating the 2.11% return of Treasuries, even before factoring in the tax-free benefit derived from a portion of the muni return," he said.
Schankel added that supply in the form of new-issue volume has picked up, running 14% ahead of last year’s first quarter pace.
"Increased supply has been more than offset by the surge of inflows to mutual funds and ETFs in the first quarter, the strongest 3-month start to a year since at least 2007," he said. "Steady inflows of past years can quickly become outflows, usually triggered by specific events, such as the November 2016 election, but we are off to a strong start this year as investors embrace the benefit of tax-free income."
Primary market
Wells Fargo Securities priced Louisiana’s (NR/AA/NR) $185 million of Series 2019A grant anticipation revenue bonds.
JPMorgan Securities priced the New York City Housing Development Corp.’s (Aa2/AA+/NR) $186.6 million of multi-family housing revenue bonds.
BofA Securities priced the Missouri Health and Educational Facilities Authority’s (A2/NR/A) $120.22 million of Series 2019A health facilities fixed revenue bonds for CoxHealth.
BofA received the official award on the Illinois Finance Authority’s (NR/AAA/AAA) $450 million of state revolving fund green bonds for institutions.
“The inaugural green bond issuance of the Illinois Finance Authority clean water initiative state revolving fund program achieved impressive pricing results in a challenging day in the bond markets, achieving a true interest cost of 2.80%, and over $674 million in orders, oversubscribed 1.5 times for the $450 million transaction,” Chris Meister, IFA’s executive director, said in a statement. “The financing was anchored by a very robust retail order period of approximately $300 million in orders and strong interest by a green bond investor. In addition, the bond issue saw interest from a broad spectrum of institutional investors.”
In the competitive arena, California (Aa2/AA/AA-) sold about $102 million of veterans obligation GOs.
JPMorgan won the $68.8 million of Series CS Bid Group B non-AMT GOs with a true interest cost of 2.9985%. Raymond James won the $32.96 million of Series CS Bid Group A non-AMT GOs. with a TIC of 3.5163%
Financial advisors are Montague DeRose & Associates and CFX Inc. Bond counsel are Hawkins Delafield and the State Attorney General. The funds will be used by the California Department of Veterans Affairs to provide home loans to veterans in California.
“Today’s veterans have answered our nation’s call in unimaginable ways," State Treasurer Fiona Ma said. “Multiple deployments, families placed on hold, injuries — these are among the many important reasons we would want to offer a special salute to the dedicated men and women of the armed forces. It is an honor to play a part in the continuation of this critical program that ensures home ownership opportunities.”
Thursday’s bond sales
Bond Buyer 30-day visible supply at $6.96B
The supply calendar rose $889.1 million to $6.96 billion Thursday and is composed of $2.07 billion of competitive sales and $4.90 billion of negotiated deals.
Secondary market
Munis were mostly weaker on the MBIS benchmark scale Thursday, which showed yields rising one basis point in both the 10-year and 30-year maturities. High-grade munis were also mostly weaker, with yields gaining one basis point in the 10-year maturity and less than a basis point the 30-year maturity.
On Refinitiv Municipal Market Data’s AAA benchmark scale, the yield on both the 10-year muni GO and the 30-year muni remained unchanged.
The 10-year muni-to-Treasury ratio was calculated at 76.9% while the 30-year muni-to-Treasury ratio stood at 92.2%, according to MMD.
Treasuries were weaker as stocks traded higher.
Previous session's activity
The MSRB reported 40,971 trades Wednesday on volume of $14.51 billion.
California, New York and Texas were most traded, with the Golden State taking 18.666% of the market, the Lone Star State taking 11.928% and the Empire State taking 10.682%.
The most actively traded issue was the Illinois Series 2003 taxable GO 5.1s of 2033 which traded 13 times on volume of $49.01 million.
Treasury auctions announced
The Treasury Department announced these auctions:
- $16 billion 29-year 10-month 3% bonds selling on April 11;
- $24 billion 9-year 11-month 2 5/8% notes selling on April 10;
- $38 billion three-year notes selling on April 9;
- $36 billion 182-day bills selling on April 8; and,
- $42 billion 91-day bills selling on April 8.
Treasury auctions bills
The Treasury Department Thursday auctioned $50 billion of four-week bills at a 2.390% high yield, a price of 99.814111.
The coupon equivalent was 2.434%. The bid-to-cover ratio was 2.96. Tenders at the high rate were allotted 47.24%. The median rate was 2.360%. The low rate was 2.340%.
Treasury also auctioned $35 billion of eight-week bills at a 2.380% high yield, a price of 99.629778. The coupon equivalent was 2.429%. The bid-to-cover ratio was 3.35. Tenders at the high rate were allotted 64.72%. The median rate was 2.360%. The low rate was 2.340
Gary E. 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.
