Prices of top-rated municipal bonds finished stronger on Thursday, according to traders, with yields on some maturities declining by as much as four basis points.
Treasury prices also strengthened as stocks swooned after an announcement by Dow Jones industrial average component Caterpillar Inc. that it was cutting 10,000 jobs. The market decline came ahead of a speech by Federal Reserve Chair Janet Yellen on inflation and monetary policy.
Secondary Trading
The yield on the 10-year benchmark muni general obligation was four basis points lower at 2.08% from 2.12% on Wednesday, while the yield on the 30-year GO fell three basis points to 3.08% from 3.11%, according to the final read of Municipal Market Data's triple-A scale.
Treasury prices were higher on Thursday, with the yield on the two-year Treasury note declining to 0.68% from 0.70% on Wednesday, while the 10-year yield dropped to 2.12% from 2.14% and the 30-year yield decreased to 2.90% from 2.94%.
In late trading, the Dow Jones Industrial Average was down about 60 points; it had been down as much as 250 points earlier in the session. The Nasdaq Composite Index declined around 15 points and the S&P 500 Index dropped about 20 points.
The 10-year muni to Treasury ratio was calculated on Thursday at 98.4% versus 98.9 on Wednesday, while the 30-year muni to Treasury ratio stood at 106.2% compared to 105.8%, according to MMD.
Primary Market
Municipal bond traders saw the last of the week's big new issues come to market on Thursday.
Raymond James priced Tennessee Housing Development's $175 million of residential finance program bonds.
The $43.07 million of Issue 2015-2A AMT bonds were priced as a 2046 bullet maturity as 4s to yield approximately 2.45% at a yield to call in 2025. The $131.93 million of Issue 2015-2B non-AMT bonds were priced at par to yield from 0.40% in 2016 to 3.95% in 2038; a 2045 term bond was priced as 4s to yield approximately 2.28% at a yield to call in 2025.
The issue is rated Aa1 by Moody's Investors Service and AA-plus by Standard & Poor's.
Wells Fargo Securities priced the second part of the San Francisco Bay Area Transit District's $463.42 million offering - the $276.78 million of general obligation refunding bonds, rated triple-A by Moody's and S&P. The bonds were priced to yield from 0.50% with a 3% coupon in 2017 to 3.31% with a 4% coupon in 2035.
On Tuesday Wells Fargo priced BART's $186.64 million of Series 2015A sales tax refunding bonds, rated AA-plus by S&P and Fitch.
Since 1995, BART has sold roughly $2.78 billion of debt. The years of 2005 and 2007 saw the most issuance with $452 million and $400 million, respectively. BART did not come to market at all in 1996-1997, 2000, 2002-2004 or 2008-2009.
Goldman Sachs priced the Sacramento Public Financing Authority's taxable Series 2015 lease revenue bonds for the Golden 1 Center. The bonds were priced at par to yield from 2.51% in 2018 to 3.995% in 2023; a 2050 maturity was priced at par to yield 5.637% with an average life of 24.7 years.
The issue was rated A-plus by S&P and A by Fitch.
Goldman also offered $19.38 million of one CUSIP on a 2005 New York Liberty Development Corp. revenue bond issue as a reopening.
The Series 2005 second tranche revenue bonds, Goldman Sachs Headquarters issue, was priced as 5 1/4s to yield 4% in 2035. The bonds were rated A3 by Moody's, A-minus by S&P and A by Fitch Ratings.
The issue was a reopening of CUSIP 531127AC2. These bonds have the same interest rate, maturity date and redemption terms, and same CUSIP as the original Series 2005 bonds due Oct. 1, 2035. From the entire issue $1.243 billion is currently outstanding.
Tax-Exempt Money Market Funds Post Outflows
Tax-exempt money market funds experienced outflows of $1.47 billion, bringing total net assets to $245.58 billion in the period ended Sept. 21, according to The Money Fund Report, a service of iMoneyNet.com. This followed an outflow of $1.87 billion to $247.05 billion in the previous week.
The average, seven-day simple yield for the 377 weekly reporting tax-exempt funds remained at 0.01% for the 125th straight week.
The total net assets of the 948 weekly reporting taxable money funds rose $17.78 billion to $2.440 trillion in the period ended Sept. 22, after an outflow of $3.96 billion to $2.423 trillion the previous week.
The average, seven-day simple yield for the taxable money funds remained at 0.02% for the 36th week in a row.
Overall, the combined total net assets of the 1,325 weekly reporting money funds increased $16.31 billion to $2.686 trillion in the period ended Sept. 22, which followed an outflow of $5.83 billion to $2.670 trillion the week before.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 34,486 trades on Wednesday on volume of $10.074 billion.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar fell $92.4 million to $6.92 billion on Thursday. The total is comprised of $2.64 billion competitive sales and $4.29 billion of negotiated deals.
