Prices of top-shelf municipal bonds continued to strengthen on Friday, traders said with yields on some maturities falling by as much as three basis points by mid-session.
Meanwhile, traders are awaiting next week's $8.9 billion of new supply, after digesting an extra hefty portion of bonds this week.
Secondary Market
The yield on the 10-year benchmark muni general obligation was down one to three basis points from 1.97% on Thursday, while the yield on 30-year GO fell as much as two basis points from 2.77%, according to a read of Municipal Market Data's triple-A scale.
At the start of the week, the yield on the 10-year stood at 2.12% and the yield on the 30-year was at 2.93%.
Treasury prices were higher on Friday. The yield on the two-year Treasury note fell to 0.58% from 0.62% on Thursday, while the 10-year yield was down to 1.93% from 1.97% and the 30-year yield fell to 2.51% from 2.55%.
The 10-year muni to Treasury ratio was calculated at 99.8% on Thursday versus 106.0% on Wednesday, while the 30-year muni to Treasury ratio stood at 109.2% compared to 113.7%.
Primary Market
Traders' eyes are now turning toward next week's new issue calendar. There are $6.4 billion of negotiated deals scheduled for next week and $2.6 billion of competitive sales slated.
Topping the calendar is the $1.7 billion tobacco bond deal from California's Golden State Tobacco Securitization Corp. The deal, scheduled to be priced by Citigroup Global Markets on Tuesday after a one-day order period, is rated A1 by Moody's Investors Service, AA by Standard & Poor's and A by Fitch Ratings.
Also slated is the Virginia College Building Authority's $636 million Series 2015 A and B bonds scheduled to be priced by J.P. Morgan Securities on Thursday after a one-day retail order period. The bonds are rated Aa1 by Moody's and AA-plus by S&P and Fitch.
And Citigroup is also expected to price the Northeast Independent School District, Texas' $390 million of Series 2015 bonds on Tuesday. The bonds are rated triple-A by Moody's and S&P.
Leading off the chunky competitive slate, are two separate sales on Wednesday from Anne Arundel County, Md., totaling $384 million. The first sale consists of $269 million of general obligation bonds comprised of $191.4 million consolidated general improvement Series 2015 and $77.6 million consolidated water and sewer Series 2015. Also scheduled are $115 million GO refunding Series 2015 consisting of $62.8 million consolidated general improvements and $35.755 million consolidated water and sewer bonds and $16.14 million consolidated golf course projects. The bonds are rated Aa1 by Moody's, triple-A by S&P and AA-plus by Fitch.
The county last sold GOs on March 25, 2014, when Bank of America Merrill Lynch won $206 million of Series 2014 consolidated general improvement bonds with a TIC of 2.9496%.
As the University of Kentucky men's basketball team tries to complete its undefeated season with victory in the NCAA tournament, the muni market will be waiting to see who wins UK's three competitive issues totaling $282 million that will be going up for bidding on Tuesday.
The largest issue is $149 million series A of general receipts refunding bonds, second is $111 million Series B of general receipts refunding bonds and lastly is $22 million Series C of general receipts refunding bonds. All three issues are rated Aa2 by Moody's and AA by S&P.
The university last sold bonds on June 26, 2014, with Morgan Stanley winning the bidding for $99.675 million with a true interest cost of 2.0213%.
The Week's Most Actively Quoted Issues
Chicago, California and Puerto Rico names were among the most actively quoted issues in the week ended March 20, according to data released by Markit.
Among bid-side quotes, the Chicago Board of Education 5s of 2042 were quoted by 10 unique dealers. Among ask-side quotes, the University of California 5s of 2025 were quoted by 17 dealers. And among two-sided quotes, the Puerto Rico 8s of 2035 were quoted by nine dealers, Markit said.
The Week's Most Actively Traded Issues
Among the most actively traded issues in the week ended March 20, were issuers from New York, Kentucky and California, according to Markit.
In the GO bond sector, New York City 5s of 2034 were traded 66 times. In the revenue bond sector, the Kentucky State Municipal Power Agency power system 4s of 2039 were traded 82 times. And in the taxable bond sector, the University of California 4.131s of 2045 were traded 76 times, according to Markit.
Tax-Exempt Bond Funds See Inflows
Municipal bond funds which report weekly posted $133.676 million of inflows in the week ended March 18, after experiencing inflows of $152.957 million in the week ended March 11, according to the latest Lipper data. It was the 11th straight week muni funds experienced inflows.
The four-week moving average remained positive at $281.111 million in the latest week after being in the green at $262.454 million in the prior week. A moving average is an analytical tool used to smooth out price changes by filtering out fluctuations.
Muni bond funds so far have experienced inflows in each week of 2015, according to Lipper data. Inflows for the year total about $5.923 billion.
Long-term muni bond funds saw inflows of $137.153 million in the latest week, after experiencing inflows of $110.328 million in the previous week.
High-yield muni funds recorded an inflow of $90.989 million in the latest reporting week, after seeing outflows of $51.421 million in the previous week. Exchange-traded funds had inflows of $73.093 million, after recording inflows of $75.130 million in the previous week.
In contrast, long-term municipal bond mutual funds posted $278 million of inflows in the week ended March 11, according to the Investment Company Institute. ICI reported that inflows into long-term funds were $675 million in the previous week.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar increased $3.977 billion to $11.828 billion on Friday. The total is comprised of $3.901 billion competitive sales and $7.928 billion of negotiated deals.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 37,505 trades on Thursday on volume of $12.728 billion.
Most active on Thursday, based on the number of trades, was the Henrico County Economic Development Authority, Va., residential care facilities revenue refunding mortgage bonds for Westminster Canterbury 4s of 2033, which traded 140 times at an average price of 98.698 with an average yield of 4.101%; (initial offering price of 98.712 and an initial offering yield of yield of 4.00%).
