Prices of top-rated municipal bonds were stronger at mid-session, according to traders, with yields on some maturities weakening by as much as four basis points.
Treasury prices also strengthened as stocks slumped ahead of a speech by Federal Reserve Chair Janet Yellen on inflation and monetary policy and after an announcement by Dow component Caterpillar that it was cutting 10,000 jobs.
Secondary Trading
The yield on the 10-year benchmark muni general obligation was two to four basis points weaker from 2.12% on Wednesday, while the yield on the 30-year GO was from one to three basis points weaker from 3.11%, according to a 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 0.66% from 0.70% on Wednesday, while the 10-year yield dropped to 2.09% from 2.14% and the 30-year yield decreased to 2.88% from 2.94%.
In midday trading, the Dow Jones Industrial Average was down about 200 points as the Nasdaq Composite Index declined around 70 points and the S&P 500 Index dropped about 25 points.
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 seeing the last of the week’s big new issues come to market on Thursday.
Raymond James priced Tennessee Housing Development’s $175 million of residential finance program bonds.
The $43.07 million of Issue 2015-2A AMT bonds were priced as a 2046 bullet maturity as 4s to yield approximately 2.45% at a yield to call in 2025. The $131.93 million of Issue 2015-2B non-AMT bonds were priced at par to yield from 0.40% in 2016 to 3.95% in 2038; a 2045 term bond was priced as 4s to yield approximately 2.28% at a yield to call in 2025.
The issue is rated Aa1 by Moody’s Investors Service and AA-plus by Standard & Poor’s.
Wells Fargo Securities priced the second part of the San Francisco Bay Area Transit District’s $455.17 million offering – the $268.53 million of general obligation refunding bonds, rated triple-A by Moody’s and S&P. The bonds were priced to yield from 0.50% with a 3% coupon in 2017 to 3.34% with a 4% coupon in 2035.
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.
Goldman Sachs offered $19.38 million of one CUSIP on a 2005 New York Liberty Development Corp. revenue bond issue as a reopening.
The Series 2005 second tranche revenue bonds, Goldman Sachs Headquarters issue, was priced as 5 1/4s to yield 4% in 2035. The bonds were rated A3 by Moody’s, A-minus by S&P and A by Fitch Ratings.
The issue was a reopening of CUSIP 531127AC2. These bonds have the same interest rate, maturity date and redemption terms, and same CUSIP as the original Series 2005 bonds due Oct. 1, 2035. From the entire issue $1.243 billion is currently outstanding.
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.
