Prices of top-rated municipal bonds were stronger in early trading, according to traders, with yields on some maturities weakening by as much as three basis points.
On Wednesday, prices of top-quality municipal bonds ended steady in slow trading due to the Jewish high holy day of Yom Kippur and trading was expected to remain subdued on Thursday 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 one to three basis points weaker from 2.12% on Wednesday, while the yield on the 30-year GO was as much as two basis points weaker from 3.11%, according to an early 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 0.67% from 0.70% on Wednesday, while the 10-year yield dropped to 2.11% from 2.14% and the 30-year yield decreased to 2.89% from 2.94%.
The 10-year muni to Treasury ratio was calculated on Wednesday at 98.9% versus 99.8% on Tuesday, while the 30-year muni to Treasury ratio stood at 105.8% compared to 106.1%, according to MMD.
Primary Market
Municipal bond traders were set to see the last of the week’s significant new issues come to market on Thursday.
Wells Fargo Securities is expected to price the second part of the San Francisco Bay Area Transit District’s $358.56 million offering — $170.93 million of general obligation refunding bonds, rated triple-A by Moody’s and S&P.
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.
Also on Thursday, Barclays Capital is expected to price Toledo Hospital’s $270 million of Series 2015A taxable corporate CUSIP bonds for the ProMedica Healthcare Obligated group. The issue is rated Aa3 by Moody’s and AA by S&P.
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.
