Prices on top-rated municipal bonds ended weaker on Thursday, traders said, with yields up by as much as three basis points on some maturities as the market absorbed more than $1 billion of debt from the New York State Dormitory Authority.
Secondary Market
Prices of top-quality munis finished lower. The yield on the 10-year benchmark muni general obligation rose three basis points to 1.97% from 1.94% on Wednesday, while the yield on 30-year GO was up three basis points to 2.84% from 2.81%, according to the final read of MMD's triple-A scale.
Treasury prices were also lower on Thursday. The yield on the two-year Treasury note rose to 0.55% from 0.53% on Wednesday, while the 10-year yield increased to 1.96% from 1.90% and the 30-year yield rose to 2.60% from 2.53%.
The 10-year muni to Treasury ratio was calculated on Thursday at 100.6% versus 102.4% on Wednesday, while the 30-year muni to Treasury ratio stood at 109.3% compared to 111.6%.
Primary Market
DASNY, which has ranked among the top 10 muni issuers in each of the past 10 years, took center stage on Thursday with issues for three universities.
Morgan Stanley priced DANSY's $692.47 million of Series 2015A revenue bonds for New York University after a one-day retail order period.
The DASNY deal was priced for institutions to yield from 0.15% with a 5% coupon in 2016 to 3.03% with a 5% coupon in 2035. A 2038 term bond was priced as 4s to yield 3.51%; a 2041 term was priced at par to yield 2.50%; a 2045 term was priced as 5s to yield 3.17% and a 2048 term was priced as 5s to yield 3.25%. The 2016 maturity was offered as a sealed bid.
On Wednesday, the deal was priced for retail to yield from 0.70% with a 3% coupon in 2017 to 3.00% with a 5% coupon in 2035. A 2038 term was priced as 4s to yield 3.47%; a 2041 term was priced at par to yield 2.50%; a 2045 bond was priced as 5s to yield 3.15% and a 2048 term was priced as 5s to yield 3.32%.
"The DASNY NYU deal came out a tad bit cheap," said a New York trader, "But I think DASNY, overall, came to market at the right time when there wasn't a whole lot of supply and it helped them."
Morgan Stanley also priced DASNY's $265.97 million of Series 2015B taxable revenue bonds for NYU on Thursday. No details were immediately available.
All the NYU bonds are rated Aa3 by Moody's Investors Service and AA-minus by Standard & Poor's.
Goldman, Sachs received the official award on DASNY's $124.29 million of Series 2015A revenue bonds for The New School. The issue was priced to yield from 0.41% with a 3% coupon in 2016 to 3.26% with a 5% coupon in 2035. A 2040 term bond was priced as 5s to yield 3.37%; a 2045 term was priced as 5s to yield 3.42% and a split 2050 maturity was priced as 4s to yield 4.10% and as 5s to yield 3.625%. The New School bonds are rated A3 by Moody's and A-minus by S&P.
Goldman also received the verbal award on DASNY's $47.81 million Series 2015B revenue bonds for Columbia University. The bonds were priced to yield from 0.34% with a 3% coupon in 2016 to 1.88% with a 5% coupon in 2024. The Columbia University bonds are rated triple-A by Moody's and S&P.
"People always say that when there is a heavy amount of volume it crushes the market," the New York trader said, "But when there is a lack of supply, like this week for example, new issues allow for price discovery and when you don't have supply there is also not a lot of noise in secondary follow-through."
Tax-Exempt Money Market Funds Post Outflow
Tax-exempt money market funds had an outflow of $1.84 billion, bringing total net assets to $259.50 billion in the period ended April 6, according to The Money Fund Report, a service of iMoneyNet.com. This followed an outflow of $521.6 million to $259.47 billion in the previous week.
The average, seven-day simple yield for the 396 weekly reporting tax-exempt funds remained at 0.01% for a 101st straight week.
The total net assets of the 991 weekly reporting taxable money funds fell $6.76 billion to $2.412 trillion in the period ended April 7, after experiencing an outflow of $42.55 billion to $2.418 trillion in the prior week.
The average, seven-day simple yield for the taxable money funds remained at 0.02% for the 11th consecutive week.
Overall, the combined total net assets of the 1,387 weekly reporting money funds decreased $4.92 billion to $2.671 trillion in the period ended April 7, which followed an inflow of $44.36 billion to $2.676 trillion in the prior period.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar decreased $2.514 billion to $8.611 billion on Wednesday. The total is comprised of $4.139 billion competitive sales and $4.472 billion of negotiated deals.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 40,277 trades on Wednesday on volume of $9.705 billion. Most active, based on the number of trades, was the Knoxville, Tenn., Series 2015A water system revenue refunding 3 1/2s of 2040, which traded 88 times at an average price of 99.791 with an average yield of 3.505%. The bonds were initially priced at 98.00 to yield 3.622%.
