Municipal bonds weakened on the long end Thursday along as the market took a breather to digest the week’s hefty supply.

The majority of the week’s big deals have priced over the past few days and are now moving into the secondary market where they are receiving much attention from retail buyers.

Investors are looking for higher yielding securities, market sources said, especially liquid issues with good name recognition.

“The Pennsylvania deal yesterday was all about yield,” said one New York trader. “There is a huge amount of cash around for California and New York credits 10-years and in.”

On Wednesday, Pennsylvania competitively sold $1.25 billion of general obligation bonds. Bank of America Merrill Lynch won the GOs with a true interest cost of 3.6161% and priced them with top yields of 3.87% in the 2038 maturity and 3.75% in the 2039 maturity, which was insured by Assured Guaranty Municipal.

Primary market
With most of the big deals now in the rear-view mirror, a few deals of size are still to price Thursday.

RBC Capital Markets is expected to price the Massachusetts Educational Financing Authority’s $305.5 million of Series 2018 Issue L education loan revenue bonds.

Bank of America Merrill Lynch is expected to price the Dubois Hospital Authority, Pa.’s $158 million of Series 2018 hospital revenue bonds for Penn Highlands Healthcare.

Bond Buyer 30-day visible supply at $8.72B
The Bond Buyer's 30-day visible supply calendar decreased $4.2 billion to $8.72 billion on Thursday. The total is comprised of $3.80 billion of competitive sales and $4.92 billion of negotiated deals.

Secondary market
Municipal bonds were weaker on the long end, according to a midday read of two MBIS scales.

MBIS’ benchmark muni yields rose as less than one basis point in the nine- to 30-year maturities and fell less than a basis point in the one- to eight-year maturities.

Yields calculated on MBIS’ AAA scale rose less than one basis point in the one- to three-year and 10- to 30-year maturities and fell less than a basis point in the four- to nine-year maturities.

According to Municipal Market Data’s AAA benchmark scale, municipals were weaker at mid-session. Yields rose as much as one basis point in the 10-year general obligation muni maturity and gained as much as two basis points in the 30-year muni maturity.

Treasury bonds were weaker, with the 10-year yield moving past the 3.10% level as stocks traded up.

On Wednesday, the 10-year muni-to-Treasury ratio was calculated at 81.5% while the 30-year muni-to-Treasury ratio stood at 94.6%, according to MMD.

Previous session's activity
The Municipal Securities Rulemaking Board reported 43,463 trades on Wednesday on volume of $10.92 billion.

California, New York and Texas were the states with the most trades, with the Golden State taking 16.896% of the market, the Empire State taking 14.462% and the Lone Star State taking 8.66%.

Tax-exempt money market funds saw inflows
Tax-exempt money market funds experienced inflows of $2.09 billion, raising their total net assets to $136.70 billion in the week ended May 15, according to The Money Fund Report, a service of This followed an inflow of $2.89 billion on to $134.61 billion in the previous week.

The average, seven-day simple yield for the 202 weekly reporting tax-exempt funds fell to 1.02% from 1.11% the previous week.

The total net assets of the 833 weekly reporting taxable money funds grew to $15.51 billion to $2.655 trillion in the week ended May 14, after an inflow of $2.68 billion to $2.640 trillion the week before.

The average, seven-day simple yield for the taxable money funds increased to 1.37% from 1.36% from the prior week.

Overall, the combined total net assets of the 1,035 weekly reporting money funds increased $17.6 billion to $2.792 trillion in the week ended May 14, after inflows of $5.57 billion to $2.775 trillion in the prior week.

Treasury details next week’s auctions
The Treasury Department on Thursday announced these auctions:

  • $30 billion of seven-year notes selling on May 24;
  • $36 billion of five-year notes selling on May 23;
  • $33 billion of two-year notes selling on May 22;
  • $15 billion of one-year 11-month floating rate notes selling on May 23;
  • $26 billion of 364-day bills selling on May 22;
  • $42 billion of 183-day bills selling on May 21; and
  • $48 billion of 91-day bills selling on May 21.

Gary Siegel contributed to this report.

Data appearing in this article from Municipal Bond Information Services, including the MBIS municipal bond index, is available on The Bond Buyer Data Workstation. Click here for a brief tour of the Workstation, or contact Vanessa Kim at 212-803-8474 for more information.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.
Chip Barnett

Chip Barnett

Chip Barnett is a journalist with more than 40 years of experience. Barnett is currently Senior Market Reporter for The Bond Buyer.
Aaron Weitzman

Aaron Weitzman

Aaron Weitzman is a markets reporter for The Bond Buyer, focusing on the sell side of the municipal bond market.