Prices of top-quality municipal bonds were mostly weaker at mid-session, according to traders, with yields on some maturities strengthening by as much as three basis points.
Municipal bond traders saw more new deals hit the screens on Thursday, topped by the North Texas Tollway Authority System's $768 million bond sale.
Secondary Trading
The yield on the 10-year benchmark muni general obligation on Thursday was steady from 2.22% on Wednesday, while the yield on the 30-year GO was one to three basis points stronger from 3.17%, according to a read of Municipal Market Data's triple-A scale.
Treasury prices were mostly lower on Thursday, with the yield on the two-year Treasury note slipping to 0.73% from 0.74% on Wednesday, while the 10-year yield rose to 2.21% from 2.19% and the 30-year yield increased to 2.98% from 2.95%.
The 10-year muni to Treasury ratio was calculated on Wednesday at 101.9% versus 100.5% on Tuesday, while the 30-year muni to Treasury ratio stood at 107.8% compared to 105.7%, according to MMD.
Primary Market
Barclays Capital priced and repriced the biggest deal of the week – the NTTA’s $768.11 million of Series 2015B first-tier revenue refunding bonds.
The issue was repriced as 5s to yield from 0.19% in 2016 to 3.71% in 2034; a 2035 maturity was priced as 4s to yield approximately 4.056%, a 2040 maturity was priced as 5s to yield 3.92% and a 2045 maturity was priced as 5s to yield 4%.
The authority recently saw two rating upgrades, as Moody's Investors Service raised its rating to A1 from A2 on Aug. 27 and Standard & Poor’s increased its rating to A from A-minus on Aug. 28.
The NTTA board has authorized refunding of up to $1 billion of debt issued in 2008, but chief financial officer Horatio Porter told The Bond Buyer last week the deal was likely to end up in the $760 million range. At that size, NTTA will have refunded about $1.7 billion of debt in 2015. The authority is not expecting to issue any more debt this year.
RBC Capital Markets priced the University of Oklahoma's $207 million of tax-exempt general revenue bonds.
The Series 2015C tax-exempts were priced to yield from 3.05% with 3% and 3.125% coupons in a split 2026 maturity to 4.09% with a 4% coupon in 2040. A 2045 term bond was priced as 4s to yield 4.15%.
Proceeds of the sale will go toward redesign of the university’s football stadium in Norman, Okla.
The issue is rated A-plus by S&P and AA-minus by Fitch Ratings.
The bonds were issued through the Oklahoma Capitol Improvement Authority and OU will use $117 million for redevelopment of the south end of Gaylord Family-Memorial Stadium at the main campus in Norman. Donations from the Gaylord Family Foundation and others will be added to the bond proceeds to finance the $160 million stadium project, officials said.
"This is the largest transaction OU has ever done," Kelsi Spurgeon, principal at Columbia Capital Management, the financial advisor on the sale, told The Bond Buyer last week.
In the short-term market, JPMorgan Securities is pricing the Detroit School District’s $121 million of Series 2015E junior subordinate lien obligations. The state aid revenue notes are being issued through the Michigan Finance Authority.
The deal features a statutory lien on state aid that could be tested in light of the district's severe financial stress. The district needs to issue the one-year notes to cover its operating cash flow through next August.
DPS announced last spring that it did not have enough cash to pay off a 2014 note issue due in August that carried a 2.75% interest rate. In May, it borrowed $85 million in state-aid notes to cover the bulk of the $107 million note payment due in August, paying 4.85% on the notes.
This week's borrowing marks the fourth time the district has tapped its state aid — which is declining — to cover borrowings. The new notes feature a fourth lien on the district's state aid, and they are subordinate to state-aid debt with first, second and third liens on state aid issued in 2011, 2012 and 2015 and total $338 million. They also may be subordinate to the district's late pension payments.
S&P rates the notes SP3, its lowest short-term rating.
Tax-Exempt Money Market Funds See Inflows
Tax-exempt money market funds experienced inflows of $2.23 billion, bringing total net assets to $248.92 billion in the period ended Sept. 7, according to The Money Fund Report, a service of iMoneyNet.com. This followed an outflow of $810.7 million to $246.69 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 123rd straight week.
The total net assets of the 949 weekly reporting taxable money funds fell $13.42 billion to $2.427 trillion in the period ended Sept. 8, after experiencing an outflow of $28.53 billion to $2.440 trillion in the prior week.
The average, seven-day simple yield for the taxable money funds remained at 0.02% for the 34th week in a row.
Overall, the combined total net assets of the 1,326 weekly reporting money funds decreased $11.19 billion to $2.675 trillion in the period ended Sept. 1, which followed an outflow of $29.34 billion to $2.687 trillion the week before.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 36,817 trades on Wednesday on volume of $6.450 billion.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar fell $64.2 million to $8.16 billion on Thursday. The total is comprised of $2.99 billion competitive sales and $5.17 billion of negotiated deals.
Richard Williamson, Caitlin Devitt, and Keeley Webster contributed to this report
