Prices of top-shelf municipal bonds were higher at mid-session, trader said, with yields on some longer-dated maturities falling by as much as three basis points.
Volume for next week was estimated at $6.72 billion, according to Ipreo and The Bond Buyer. This is down from a revised total of $7.36 billion that came to market this week, according to Thomson Reuters.
Secondary Market
The yield on the 10-year benchmark muni general obligation was down by as much as one basis point from 2.34% on Thursday, while the yield on the 30-year GO was down by as much as three basis points from 3.32%, according to a read of Municipal Market Data's triple-A scale.
Treasury prices were mixed on Friday with the yield on the two-year Treasury note falling to 0.71% from 0.72% on Thursday, while the 10-year yield dropped to 2.35% from 2.39% and the 30-year yield down to 3.06% from 3.11%.
The 10-year muni to Treasury ratio was calculated on Thursday at 98.2% versus 96.2% on Wednesday, while the 30-year muni to Treasury ratio stood at 106.9% compared to 104.9%, according to MMD.
Primary Market
There are $5.52 billion of negotiated deals slated for next week, up from a revised $3.16 billion; and $1.20 billion of competitive sales are scheduled, down from a revised $4.19 billion.
Several deals from New York City issuers top next week's calendar.
Goldman, Sachs is set to price the biggest deal of the week - the New York City Transitional Finance Authority's $750 million of Series S-2 Fiscal 2015 building aid revenue bonds. The new money BARBs are slated for sale on Wednesday after a two-day retail order period beginning Monday.
Ramirez is co-senior manager on the sale, which is expected to be rated Aa2 by Moody's Investors Service and AA by Standard & Poor's and Fitch Ratings.
JPMorgan is expected to price the New York City Housing Development Corp.'s $563.85 million of multi-family housing revenue bonds for the Sustainable Neighborhood Program on Tuesday. The issue is initially structured as $496.45 million of Series 2015 D-1 fixed-rate bonds, $64.14 million of Series 2015 D-2 fixed-rate bonds and $3.26 million of Series 2014 Series I fixed-rate bonds. The issue is rated Aa2 by Moody's and AA-plus by S&P.
JPMorgan is also slated to price the Monroe County, N.Y., Industrial Development Corp.'s $300.62 million of bonds for the University of Rochester on Tuesday. The issue is initially structured as $182.61 million of Series 2015A tax exempt bonds, $56.59 million of Series 2015B tax-exempt bonds and $61.43 million of Series 2015C taxable bonds.
Bank of America Merrill Lynch is set to price the Florida Municipal Power Agency's $277 million of Series 2015 B&C all requirements power supply project revenue and refunding bonds on Wednesday after a one day retail order period on Tuesday. The bonds are rated A2 by Moody's and A-plus by S&P.
Citi is slated to price Louisiana's Ochsner Clinic Foundation's $252 million of taxable corporate CUSIP bonds on Thursday. The issue is initially structured as a 2045 term bond. The bonds are rated Baa1 by Moody's and BBB-plus by S&P.
Wells Fargo Securities is expected to price the Lamar Consolidated Independent School District, Texas' $211.59 million of unlimited tax schoolhouse refunding bonds on Wednesday. The bonds are expected to mature serially from 2018 through 2048. The issue is backed by the Permanent School Fund guarantee program and rated Aa2 by Moody's and AA by S&P.
Action was quieting down in the competitive arena, with no bond issues over $200 million on tap.
On Thursday, the South Carolina Transportation Infrastructure Bank will offer the biggest competitive bond sale of the week when its $155.15 million of Series 2015A revenue refunding deal goes out for bids. The bonds are initially structured to mature serially from 2017 through 2027.
The S.C. Infrastructure Bank last sold comparable bonds competitively on Oct. 10, 2012, when Bank of America Merrill Lynch won $429.91 million of Series 2012B revenue refunding bonds with a true interest cost of 2.95%.
On Tuesday, Baltimore County, Md., will offer $97.89 million of Series 2015 Metropolitan District refunding bonds. The bonds are initially structured to mature serially from 2016 through 2026.
The county last sold comparable bonds competitively on June 25, 2012, when BAML won $74.61 million of Series 2014C Metropolitan District refunding bonds.
Also on Tuesday, Lake County, Ill., is offering $90 million of Series 2015A GOs backed by a sales tax alternative revenue source. The bonds are initially structured to mature serially from 2015 through 2025.
The county last sold comparable bonds competitively on Nov. 6, 2013, when Hutchinson Shockey won $30 million of Series 2013 GOs backed by a sales tax alternative revenue source.
In the short-term competitive sector, the N.Y. Metropolitan Transportation Authority is selling $500 million of Series 2015A transportation revenue bond anticipation notes on Thursday. The BANs are dated June 25 and due March 1, 2016. The notes are rated MIG1 by Moody's, SP1-plus by S&P and F1 by Fitch.
Houston, Texas, is selling $220 million of Series 2015 tax and revenue anticipation notes on Wednesday. The TRANs are rated SP1-plus by S&P and are dated July 2 and due on June 30, 2016.
Additionally, Wayne County, Mich., is preparing to come to market with a $187 million note sale. The county hired Orrick, Herrington & Sutcliffe as special bankruptcy counsel on the deal, which expected to price on Thursday. Bond documents and an online investor road show on the deal both feature discussions on bankruptcy in the sections about investor risks.
Municipal Bond Funds See Outflows for 6th Straight Week
For the sixth week in a row, municipal bond funds reported outflows, bringing to nine out of 24 weeks this year the funds have suffered cash withdrawals.
The weekly reporting funds saw $411.755 million of outflows in the week ended June 10, after experiencing outflows of $380.735 million in the previous week, according to the latest Lipper data.
The four-week moving average remained negative at $272.198 million after being in the red at $177.359 million in the previous week. The moving average has been negative for three 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 $264.597 million in the latest week, after seeing outflows of $73.759 million in the previous week. Intermediate-term funds recorded outflows of $48.402 million after seeing outflows of $179.954 million in the prior week.
High-yield muni funds saw an outflow of $241.843 million in the latest reporting week, after seeing an inflow of $15.878 million the previous week.
Exchange traded funds saw outflows of $2.522 million, after experiencing outflows of $5.572 million in the previous week.
The Week's Most Actively Quoted Issues
Puerto Rico and Ohio issues were among the most actively quoted in the week ended June 12, according to data released by Markit.
On the bid side, the Puerto Rico Electric Power Authority (PREPA) revenue bond 5 1/4s of 2040 were quoted by nine unique dealers. On the ask side, the Franklin County, Ohio, hospital revenue bonds 4 1/8s of 2045 were quoted by 14 dealers. And among two-sided quotes, the Puerto Rico commonwealth 8s of 2035 were quoted by 10 dealers, Markit said.
The Week's Most Actively Traded Issues
Some of the most actively traded issues in the week ended June 12 were in New York, Massachusetts and Puerto Rico names, according to Markit.
In the revenue bond sector, the DASNY non-state supported debt 4s of 2035 were traded 101 times. In the GO bond sector, the Massachusetts 4s of 2045 were traded 62 times. And in the taxable bond sector, the Puerto Rico Employees Retirement System 6.15s of 2038 were traded 20 times, according to Markit.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 44,484 trades on Thursday on volume of $12.840 billion. The most active bond, based on the number of trades, was the Miami-Dade County, Fla.'s Series 2015A aviation revenue refunding AMT 4 1/2s of 2045, which traded 401 times at an average price of 100.373 with an average yield of 4.447%. The bonds were initially priced at 98.369 to yield 4.60%.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar increased $1.78 billion to $11.01 billion on Friday. The total is comprised of $2.89 billion competitive sales and $8.12 billion of negotiated deals.
