Municipal bonds ended slightly stronger on Thursday as the New Jersey Turnpike Authority and Duke University came to market with the last big deals of the week.
Citigroup priced the NJTA’s $750 million of revenue bonds. The issue was priced to yield from 3.50% with a 3.375% coupon and 3.19% with a 5% coupon in a split 2031 maturity to 3.41% with a 5% coupon in 2034; a split 2045 maturity was priced as 4s to yield 4.01% and as 5s to yield 3.70%.
The deal was rated A3 by Moody’s Investors Service, A-plus by Standard & Poor’s and A by Fitch Ratings.
Since 1995, NJTA has issued over $10 billion of debt. The authority sold its largest amount of bonds in 2009 and 2013, when it issued $2.5 billion and $2.1 billion, respectively. The authority did not sell any debt from 2006 through 2009 or in 2011.
Morgan Stanley priced the North Carolina Capital Facilities Finance Agency’s $370.87 million of Series 2015B revenue bonds for Duke University.
The issue was priced as 5s to yield 3.16% in 2041 and 3.54% in 2055. The deal was rated Aa1 by Moody’s and AA-plus by S&P.
RBC Capital Markets received the official award on the Tacoma School District No. 10, Pierce County, Wash.’s $368.28 million of Series 2015 unlimited tax general obligation and refunding bonds.
The issue was priced to yield from 0.19% and 0.35% with a 2% coupon in a split 2016 maturity to 3.19% with a 5% coupon in 2036; a 2039 maturity was priced as 5s to yield 3.30%. The bonds were backed by the Washington State School District Credit Enhancement Program and rated Aa1 by Moody’s and AA-plus by S&P.
Secondary Market
Muni prices ended slightly higher on Thursday. The yield on the 10-year benchmark muni general obligation slipped one basis point at 2.01% from 2.02% on Wednesday, while the yield on the 30-year GO was off one basis point to 3.05% from 3.06%, 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 falling to 0.59% from 0.62% on Wednesday, while the 10-year yield slipped to 2.01% from 2.02% and the 30-year yield decreased to 2.84% from 2.87%.
The 10-year muni to Treasury ratio was calculated on Thursday at 99.3% versus 99.6% on Wednesday, while the 30-year muni to Treasury ratio stood at 106.6% compared to 106.7%, according to MMD.
Puerto Rico GO Prices Fall
Puerto Rico was in the news again on Thursday as Resident Commissioner Pedro Pierluisi and others testifying at a U.S. Senate committee hearing said that some of commonwealth’s debt may be unconstitutional and, if so, should not be paid.
While the debt in question was not specified, experts said it was a reference to bonds issued by the Puerto Rico Sales Tax Financing Corp. (COFINA).
Interactive Data reported that COFINA bonds were trading mixed on Thursday, with some securities rising even as others fell.
Meanwhile, the Puerto Rico commonwealth general obligation bond 8s of 2035 were actively traded and fell to their lowest price level in three months, according to the Municipal Securities Rulemaking Board's EMMA website. On Aug. 25, the GO 8s traded as low as 69.50 cents on the dollar to yield 12.079%, according EMMA.
Markit reported that the commonwealth GO 8s on Thursday were trading around 70.85 cents on the dollar, compared to 73.50 on Wednesday. The bonds were yielding almost 12%.
Live Market Survey from San Francisco
Almost half of the respondees in a survey at The Bond Buyer’s 25th annual California Public Finance Conference in San Francisco doubt interest rates will be raised this year. Asked when the Federal Reserve Board will move interest rates, 48% said the move will come in the first quarter of 2016, while 21% thought that a rate hike will take place in the fourth quarter of this year.
Asked to predict 2015 muni issuance, almost 37% of the audience said they expect volume to come in between $300 billion and $349 billion, while 30% said volume will be greater than $350 billion and 28% said volume will land somewhere between $250 billion-$299 billion.
Tax-Exempt Money Market Funds Post Outflows
Tax-exempt money market funds experienced outflows of $1.04 billion, bringing total net assets to $245.84 billion in the period ended Oct. 19, according to The Money Fund Report, a service of iMoneyNet.com. This followed an outflow of $64.8 million to $246.88 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 129th straight week.
The total net assets of the 950 weekly reporting taxable money funds fell $1.07 billion to $2.477 trillion in the period ended Oct. 20, after an inflow of $12.52 billion to $2.479 trillion the previous week.
The average, seven-day simple yield for the taxable money funds remained at 0.02% for the 40th week in a row.
Overall, the combined total net assets of the 1,327 weekly reporting money funds decreased $2.11 billion to $2.723 trillion in the period ended Oct.20, which followed an inflow of $12.46 billion to $2.725 trillion the week before.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 38,266 trades on Wednesday on volume of $10.28 billion.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar fell $1.48 billion to $8.22 billion on Thursday. The total is comprised of $1.80 billion competitive sales and $6.43 billion of negotiated deals.
