Prices on top-shelf municipal bonds continued to strengthen, traders said, as yields on some maturities dropped by as much as nine basis points by mid-session.
The primary market was rather quiet, with trading desks working through the bulk of new supply that priced over the past few days.
Secondary Market
The yield on the 10-year benchmark muni general obligation fell by five to seven basis points from 2.03% on Wednesday, while the yield on 30-year GO declined by seven to nine basis points from 2.85%, according to a read of Municipal Market Data's triple-A scale.
Treasury prices were mixed on Thursday. The yield on the two-year Treasury note rose to 0.60% from 0.56% on Wednesday, while the 10-year yield decreased to 1.95% from 1.97% and the 30-year yield dropped to 2.51% from 2.54%.
The 10-year muni to Treasury ratio was calculated at 106.0% on Wednesday versus 101.7% on Tuesday, while the 30-year muni to Treasury ratio stood at 113.7% compared to 110.9%.
Primary Market
J.P. Morgan Securities has received the official award on the Albuquerque Bernalillo County Water Utility Authority, N.M.'s $211.94 million of senior lien water and sewer system refunding and improvement revenue bonds. The issue was priced to yield from 0.74% with a 4% coupon in 2017 to 3.37% with a 4% coupon in 2033. The issue is rated Aa2 by Moody's Investors Service, AA-plus by Standard & Poor's and AA by Fitch Ratings.
JP Morgan also received the formal award on the Michigan Finance Authority's $169.95 million of hospital revenue refunding bonds issued for McLaren HealthCare. The $102 million Series A bonds were priced to yield from 0.48% with a 3% coupon in 2016 to 4% with a 4% coupon and to 3.55% with a 5% coupon in a split 2035 maturity; a 2038 term bond was priced as 5s to yield 3.63%. The $67.95 million Series B bonds were priced to yield from 0.45% with a 2% coupon in 2016 to 3.65% with a 5% coupon in 2035. The issue is rated Aa3 by Moody's and AA-minus by Fitch.
Tax-Exempt Money Market Funds See Outflow
Tax-exempt money market funds fell $443.7 million, bringing total net assets to $259.99 billion in the period ended March 16, according to The Money Fund Report, a service of iMoneyNet.com. This followed an inflow of $1.09 billion to $260.43 billion in the previous week.
The average, seven-day simple yield for the 396 weekly reporting tax-exempt funds remained at 0.01% for a 98th straight week.
The total net assets of the 991 weekly reporting taxable money funds fell $19.06 billion to $2.428 trillion in the period ended March 17, after experiencing an inflow of $10.64 billion to $2.447 trillion in the prior week.
The average, seven-day simple yield for the taxable money funds remained at 0.02% for the ninth consecutive week.
Overall, the combined total net assets of the 1,387 weekly reporting money funds decreased $19.50 billion to $2.688 trillion in the period ended March 10, which followed an inflow of $11.73 billion to $2.708 trillion in the prior period.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar decreased $720.4 million to $7.851 billion on Thursday. The total is comprised of $3.677 billion competitive sales and $4.174 billion of negotiated deals.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 41,883 trades on Wednesday on volume of $13.481 billion.
Most active on Wednesday, based on the number of trades, was the Kentucky Municipal Power Agency's Series 2015A power system revenue refunding bonds (Prairie State Project), 4s of 2039, which traded 279 times at an average price of 98.945 with an average yield of 4.065%; (initial offering price of 97.858 and an initial offering yield of yield of 4.14%).
