Prices of top-rated municipal bonds broke a three-day streak and turned weaker on Thursday, traders said, as yields on some maturities rose by as much as two basis points.
In the primary, Bank of America Merrill Lynch priced the Illinois State Toll Highway Authority's $400 million deal.
Secondary Market
For the first time this week, muni yields moved higher.
The yield on the 10-year benchmark muni general obligation was up as much as two basis points from 2.22% on Wednesday, while the yield on the 30-year GO rose by as much as two basis points from 3.20%, according to a read of Municipal Market Data's triple-A scale.
In news from Asia, Chinese stocks staged their biggest rebound in six years, as the Shanghai Composite Index rallied 5.8%. In Europe, attention was focused on Greece, as Prime Minister Alexis Tsipras delivered a spending cut plan to bolster the government's request for a new bailout loan.
Treasury prices were lower on Thursday, with the yield on the two-year Treasury note rising to 0.57% from 0.55% on Wednesday, while the 10-year yield rose to 2.27% from 2.20% and the 30-year yield increased to 3.06% from 2.99%.
The 10-year muni to Treasury ratio was calculated on Wednesday at 100.6% versus 100.5% on Tuesday, while the 30-year muni to Treasury ratio stood at 107.2% compared to 106.6%, according to MMD.
Primary Market
BAML priced the Illinois State Toll Highway Authority's $400 million of Series 2015A toll highway senior revenue bonds. The issue was priced as 5s to yield from 3.08% in 2027 to 3.89% in 2040.
The bonds were rated Aa3 by Moody's Investors Service and AA-minus by Standard & Poor's and Fitch Ratings.
This deal is the first of two new-money borrowings to finance a record year of capital spending. The $1.6 billion of capital spending planned this year is part of the 15-year, $12 billion Move Illinois capital program launched in 2011. The authority operates 286 miles of toll highways in 12 counties in northern Illinois.
Since 1996, the authority has issued almost $8 billion of bonds, with the most issuance occurring in 2008 and 2014 when it sold $1.1 billion and $1.5 billion, respectively. The authority sold no debt in 1997, 1999 through 2004 or in 2011 or 20012.
Citi priced the Colorado Health Facilities Authority's $204.5 million of revenue and revenue refunding bonds for the Evangelical Lutheran Good Samaritan Society project.
The bonds were priced to yield from 0.90% with a 2% coupon in 2016 to 4.24% with a 5% coupon in 2036. Term bonds in 2040 and 2045 were priced as 5s to yield 4.37% and 4.45%, respectively.
The deal was rated Baa1 by Moody's, triple-B plus by S&P and A-minus by Fitch.
Municipal Bond Issuers' CUSIP Request Volume Falls
Municipal CUSIP request volume fell for the second month in a row, according to a new report from CUSIP Global Services. Volume declined 0.9% in June, with a total of 1,513 new identifier requests made last month.
June's drop followed a 3% decrease in May. However, on a year-over-year basis, municipal bond identifier requests are still up by 38%.
The issuance trends report, tracks the issuance of new security identifiers as an early indicator of debt and capital markets activity, and June's data suggests a possible slow-down in new municipal bond issuance over the next several weeks.
Tax-Exempt Money Market Funds Post Inflows
Tax-exempt money market funds experienced inflows of $5.15 billion, bringing total net assets to $247.22 billion in the period ended July 6, according to The Money Fund Report, a service of iMoneyNet.com. This followed an outflow of $2.16 billion to $241.71 billion in the previous week.
The average, seven-day simple yield for the 389 weekly reporting tax-exempt funds remained at 0.01% for a 114th straight week.
The total net assets of the 985 weekly reporting taxable money funds rose $8.06 billion to $2.403 trillion in the period ended July 7, after experiencing an inflow of $5.23 billion to $2.395 trillion in the prior week.
The average, seven-day simple yield for the taxable money funds remained at 0.02% for the 25th consecutive week.
Overall, the combined total net assets of the 1,376 weekly reporting money funds increased $13.57 billion to $2.650 trillion in the period ended July 7, which followed an inflow of $3.06 billion to $2.637 trillion the week before.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 41,395 trades on Wednesday on volume of $8.217 billion.
The most active bond, based on the number of trades, was the Corpus Christi, Texas, Series 2015C utility system junior lien revenue improvement 4 1/8s of 2045, which traded 160 times at an average price of 100.345 with an average yield of 4.069%. The bonds were initially priced at 97.725 to yield 4.26%.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar decreased $2.27 billion to $9.83 billion on Thursday. The total is comprised of $2.77 billion competitive sales and $7.06 billion of negotiated deals.
