Prices of top-rated municipal bonds were weaker at mid-session, according to traders, with yields on some maturities up by as much as five basis points on mixed economic data.
In the primary, the state of Massachusetts sold $550 million of general obligation bonds in the competitive arena.
Secondary Market
The yield on the 10-year benchmark muni general obligation was up from three to five basis points from 2.07% on Wednesday, while the yield on the 30-year GO was up three to five basis points from 3.00%, according to a read of MMD's triple-A scale.
The Labor Department said initial jobless claims fell 34,000 to 262,000 in the latest week. Claims are now at their lowest level since 2000. Economists had expected claims to have come in at 290,000. Continuing claims fell by 74,000 to a 15-year low of 2.253 million.
Labor also reported that the Employment Cost Index rose 0.7% in the first quarter. Economists had expected a gain of 0.6%.
Meanwhile, the Commerce Department reported that personal income was unchanged in March, its worst showing in over a year. Analysts had expected a gain of 0.5% in March.
Treasury prices were also lower on Thursday with the yield on the two-year Treasury note up to 0.61% from 0.57% on Wednesday, while the 10-year yield increased to 2.10% from 2.05% and the 30-year yield rose to 2.80% from 2.75%.
The 10-year muni to Treasury ratio was calculated on Wednesday at 101.8% versus 102.5% on Tuesday, while the 30-year muni to Treasury ratio stood at 109.5% compared to 110.2%, according to MMD.
Primary Market
The state of Massachusetts sold two separate competitive GO issues totaling $550 million. Both offerings are rated Aa1 by Moody's Investors Service and AA-plus by Standard & Poor's and Fitch Ratings. Proceeds of the sale will benefit various capital purposes in the state.
Bank of America Merrill Lynch won the $450 million of Series B consolidated loan of 2015 GOs with a true interest cost of 3.9009%. The bonds were priced to yield from 3.53% with a 4% coupon in 2035 to 3.70% with a 4% coupon in 2040; a 2045 term bond was priced as 4s to yield 3.75%.
There were eight bidders for the Series B bonds, the state said, with the highest bid coming in at 4.081%.
JPMorgan won the $100 million of Series A consolidated loan of 2015 GOs with a TIC of 2.1685%. Pricing information was not immediately available.
There were 10 bidders for the Series A bonds, according to the state, with the highest bid coming in at 2.280%.
The Bay State last sold bonds competitively on Oct. 22, 2014, when Bank of America Merrill Lynch won $500 million of GOs, consolidated loan of 2014, with a TIC of 3.1277%.
In the negotiated sector, Siebert, Brandford, Shank priced the New York State Dormitory Authority's $266.84 million of State University of New York Series 2015A dormitory facilities revenue bonds for institutional investors. A one-day retail order period was held on Wednesday.
The issue was priced for institutions to yield from 0.78% with 3% and 5% coupons in a split 2017 maturity to 3.81% with a 3.75% coupon in 2036. The 2016 maturity was offered as a sealed bid.
For retail, the bonds were priced to yield from 0.73% with 3% and 5% coupons in a split 2017 maturity to 3.79% with a 3.75% coupon in 2036. No retail orders were taken in the 2028-2032 or 2034 maturities. The 2016 maturity was offered as a sealed bid.
The SUNY issue is rated Aa3 by Moody's and A-plus by S&P and Fitch.
JPMorgan received the official award on the Maryland Health and Higher Education Facilities Authority's $80.15 million of Series 2015 revenue bonds for the University of Maryland Medical System. The bonds were priced to yield from 0.35% with a 2% coupon in 2015 to 3.68% with a 5% coupon in 2035; a 2041 term bond was priced as 4s to yield 4.17%. The issue is rated A2 by Moody's, A-minus by S&P and A by Fitch.
Tax-Exempt Money Market Funds Post Outflow
Tax-exempt money market funds had an outflow of $5.36 billion, bringing total net assets to $244.69 billion in the period ended April 27, according to The Money Fund Report, a service of iMoneyNet.com. This followed an outflow of $5.71 billion to $250.04 billion in the previous week.
The average, seven-day simple yield for the 395 weekly reporting tax-exempt funds remained at 0.01% for a 104th straight week.
The total net assets of the 990 weekly reporting taxable money funds rose $905.7 million to $2.375 trillion in the period ended April 28, after experiencing an outflow of $10.44 billion to $2.374 trillion in the prior week.
The average, seven-day simple yield for the taxable money funds remained at 0.02% for the 14th consecutive week.
Overall, the combined total net assets of the 1,385 weekly reporting money funds decreased $4.45 billion to $2.620 trillion in the period ended April 28, which followed an outflow of $16.15 billion to $2.624 trillion in the prior period.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 40,901 trades on Wednesday on volume of $13.299 billion.
The most active bond, based on the number of trades, was the Genesee County, Mich., limited tax Series 2015 water supply system revenue 4s of 2045, which traded 255 times at an average price of 99.458 with an average yield of 4.012%. The bonds were initially priced at 97.445 to yield 4.15%.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar decreased $623.7 million to $7.805 billion on Thursday. The total is comprised of $4.481 billion competitive sales and $3.324 billion of negotiated deals.
