Prices of top-quality municipal bonds closed stronger on Friday, traders said, with yields on some maturities dropping by as much as four basis points. The week ended on a quiet note, in light dealer trading that left muni yields mixed on the week.
The yield on the 10-year benchmark muni general obligation on Friday was off three basis points to 2.21% from 2.24% on Thursday, while the yield on the 30-year GO was down four basis points to 3.08% from 3.12%, according to a read of Municipal Market Data's triple-A scale. Secondary trading was light, Interactive Data reported.
Compared to the prior week, the 10-year muni yield was up three basis points, while the 30-year muni yield was down four basis points. On Friday, July 31, the yield on the 10-year muni stood at 2.19% while the 30-year yield was at 3.12%.
Treasury prices were mostly higher on Friday, with the yield on the two-year Treasury note rising to 0.72% from 0.70% on Thursday, while the 10-year yield fell to 2.17% from 2.23% and the 30-year yield decreased to 2.82% from 2.91%.
The 10-year muni to Treasury ratio was calculated on Friday at 101.8% versus 100.4% on Thursday, while the 30-year muni to Treasury ratio stood at 109.0% compared to 107.3%, according to MMD.
Primary Market
The market saw almost $7 billion of new issues hit the screens during the week, consisting of about $4.6 billion of negotiated deals and around $2.4 billion of competitive sales, according to Thomson Reuters.
Minnesota competitively sold five separate offerings totaling over $1 billion.
Barclays Capital won the $386.50 million of Series 2015D general obligation state various purpose refunding bonds with a true interest cost of 2.18%. Citigroup won the $368.23 million of Series 2015A GO state various purpose refunding bonds with a TIC of 2.93%. Bank of America Merrill Lynch won the $310 million of Series 2015B GO state trunk highway bonds with a TIC of 2.88%. Robert W. Baird won the $14.89 million of Series 2015E GO state trunk highway refunding bonds with a TIC of 2.14%. Wells Fargo Securities won the $7.2 million of Series 2015C taxable GO state various purpose bonds with a TIC of 2.43%. All the issues were rated Aa1 by Moody's Investors Service and AA-plus by Fitch Ratings.
JPMorgan priced the $939.32 million of green bonds from Sound Transit, the Central Puget Sound Regional Transit Authority, Wash. The issue consisted of $789.32 million of Series 2015S-1 green bonds sales tax improvement and refunding bonds and $150 million of Series 2015S-2 A and B green bond floating-rate notes. The issue was rated Aa2 by Moody's and triple-A by Standard & Poor's.
"We were very pleased with the sale and were oversubscribed on the fixed-rate portion of the deal," Brian McCartan, executive director of finance and information technology for Sound Transit, told The Bond Buyer. The refunding portion of the deal was $387.6 million and Sound Transit netted about $30.1 million, or 7.6%, in present value savings.
Citigroup priced the Dormitory Authority of the State of New York's $509.95 million of Series 2015A revenue bonds for the Icahn School of Medicine at Mount Sinai. The issue was rated A2 by Moody's and A-minus by S&P.
In the competitive arena, Connecticut sold two separate issues of GOs totaling $500 million. Wells Fargo Securities won the Nutmeg State's $250 million of Series 2015E tax-exempt GOs with a TIC of 3.17%. Raymond James won the state's $250 million of Series 2015B taxable GOs with a TIC of 2.73%. Both sales were rated Aa3 by Moody's and AA by S&P and Fitch.
Wells Fargo Securities priced the Philadelphia Gas Works' $261.79 million of 13th Series 1998 general ordinance revenue refunding bonds. The bonds were rated Baa1 by Moody's, A-minus by S&P and BBB-plus by Fitch.
Citigroup priced the New York State Environmental Facilities Corp.'s $367.69 million of Series 2015D tax-exempt state revolving funds revenue bonds, green bonds, under the 2010 Master Financing Program. The bonds were rated triple-A by Moody's, S&P and Fitch.
Siebert Brandford Shank priced on the Oakland Unified School District, Alameda County, Calif.'s $348.71 million of election of 2012 general obligation bonds. The deal was not rated except for the Series 2015 GO refunding bond 2021 through 2030 maturities, which were insured by Assured Guaranty Municipal and rated A2 by Moody's and AA by S&P.
Morgan Stanley priced the first municipal green bond in Colorado as part of a larger sale of $159.05 million of Series E-2 bonds system enterprise revenue bonds for Colorado State University by the Board of Governors of the University system. The $42.06 million of Series 2015E-2 green bonds were backed by the Colorado Higher Education Enhanced Program and were rated Aa2 by Moody's and AA-minus by S&P.
RBC Capital Markets received the official award on the Chicago Transit Authority's $176.92 million of capital grant receipts revenue refunding bonds. The issue was rated A by Standard & Poor's and BBB by Fitch.
Raymond James priced the SLO County Financing Authority, San Luis Obispo County, Calif.'s $107.12 million of Series 2015A revenue refunding bonds for the Nacimiento Water Project. The issue is insured by Build America Mutual and rated AA by S&P and A-plus by Fitch Ratings.
The Week's Most Actively Quoted Issues
California, Puerto Rico and New Jersey were some of the most actively quoted names in the week ended Aug. 7, according to data released by Markit.
On the bid side, the Puerto Rico Commonwealth Aqueduct & Sewer Authority Revenue 5.25s of 2042 were quoted by 12 unique dealers. On the ask side, the New Jersey Transportation Trust Fund Authority 5.25s of 2036 were quoted by 15 dealers. And among two-sided quotes, the California 7.55s of 2039 were quoted by 14 dealers, Markit said.
The Week's Most Actively Traded Issues
Some of the most actively traded issues in the week ended Aug. 7 were in Colorado, New York and Connecticut, according to Markit.
In the revenue bond sector, the Colorado Regional Transportation District 4s of 2040 were traded 56 times. In the GO bond sector, the New York City 5s of 2026 were traded 37 times. And in the taxable bond sector, the Connecticut 2.5s of 2020 were traded 17 times, Markit said.
Remaining in the Red: Municipal Bond Funds Again See Outflows
Municipal bond funds saw a second week of redemptions, according to the latest Lipper data. Funds which report weekly saw $308.245 million of outflows in the week ended Aug. 5, after experiencing outflows of $73.372 million in the previous week, Lipper reported.
The latest outflow brings to 16 out of 32 weeks this year that the funds have seen redemptions. However, for the year to date, inflows are still in the green, totaling $2.953 billion.
The four-week moving average remained negative at $71.365 million after being in the red at $70.731 million in the previous week. The moving average has now been negative for 11 weeks in a row. A moving average is an analytical tool used to smooth out price changes by filtering out fluctuations.
Long-term muni bond funds also experienced outflows, losing $208.019 million in the latest week, after seeing outflows of $10.511 million in the previous week. Intermediate-term funds saw outflows of $1.413 million after seeing outflows of $14.428 million in the prior week.
Exchange traded funds, however, saw inflows of $40.478 million, after experiencing inflows of $101.548 million in the previous week.
But high-yield muni funds saw outflows of $57.808 million in the latest reporting week, after seeing an outflow of $10.152 million the previous week. In the past 14 weeks, high-yield funds have seen outflows 11 times totaling $1.775 billion and inflows three times totaling $78.785 million.
