Municipal bond traders are waiting to see how much volume the market will see next week as they eye volatile muni yields.

Secondary market
Treasuries were stronger on Friday. The yield on the two-year Treasury declined to 1.33% from 1.36% on Thursday, the 10-year Treasury yield dropped to 2.29% from 2.34% and the yield on the 30-year Treasury bond decreased to 2.88% from 2.92%.

Municipals finished mostly unchanged on Thursday. The yield on the 10-year benchmark muni general obligation was unchanged from 2.03% on Wednesday, while the 30-year GO yield was steady from 2.83%, according to the final read of Municipal Market Data's triple-A scale. Shorter maturities were one to three basis points stronger in spots.

The 10-year muni to Treasury ratio was calculated at 86.5% on Thursday, compared with 87.3% on Wednesday, while the 30-year muni to Treasury ratio stood at 96.9% versus 97.8%, according to MMD.

MSRB: Previous session's activity
The Municipal Securities Rulemaking Board reported 45,261 trades on Thursday on volume of $14.87 billion.

Illinois spreads stable
Illinois’ general obligation trading spreads didn’t move on Thursday, a day after S&P Global Ratings took the state’s BBB-minus rating off credit watch and gave it a stable outlook, said MMD strategist Daniel Berger.

“The market had already anticipated this positive rating development and there were no further movements in spreads,” Berger said.

The state’s 10-year debt held steady at a 205 basis point spread to the MMD’s top benchmark, where it’s been all week. The state has seen its spreads narrow between 70 and 80 basis points over the past two weeks due to the legislature’s passage of a fiscal 2018 budget package and its override of Gov. Bruce Rauner’s veto, Berger said.

The state could still see its rating fall to junk once Moody’s Investors Service completes its review of the budget.

Week's actively traded issues
Some of the most actively traded bonds by type in the week ended July 14 were from Illinois and New York issuers, according to Markit.

In the GO bond sector, the Chicago Board of Education 7s of 2046 were traded 73 times. In the revenue bond sector, the New York City TFA 4s of 2036 were traded 106 times. And in the taxable bond sector, the Illinois 5.1s of 2033 were traded 56 times.

Week's actively quoted issues
Illinois and New York names were among the most actively quoted bonds in the week ended July 15, according to Markit.

On the bid side, the Illinois taxable 5.1s of 2033 were quoted by 68 unique dealers. On the ask side, the DASNY revenue 4s of 2034 were quoted by 134 unique dealers. And among two-sided quotes, the Illinois taxable 5.1s of 2033 were quoted by 49 unique dealers.

Week’s primary market
Bank of America Merrill Lynch priced the New York City Transitional Finance Authority’s $1.01 billion of Fiscal 2018 Series S-1 and S-2 building aid revenue bonds. The deal is rated Aa2 by Moody’s Investors Service and AA by S&P and Fitch Ratings.

Goldman Sachs priced the Port Authority of New York and New Jersey’s $829.695 million of consolidated bonds. The deal is rated Aa3 by Moody’s and AA-minus by S&P and Fitch.

Citigroup priced the Pennsylvania Turnpike Commission’s $768.195 million of subordinate revenue and motor license fund-enhanced subordinate special revenue refunding bonds. The $379.62 million of Subseries B-1 of 2017 revenue bonds are rated A3 by Moody’s and A-minus by Fitch; the $343.13 million of Subseries B-2 of 2017 revenue bonds are rated A3 by Moody’s and A-minus by Fitch, with the exception of the 2033-2035 and 2037 maturities which are insured by Assured Guaranty Municipal Corp. and rated A2 by Moody’s and AA by S&P; and the $45.46 million of motor license fund-enhanced refunding bonds, which are rated A2 by Moody’s and AA-minus by Fitch.

Bank of America Merrill Lynch priced a $571.83 million composite bond issue for Wellstar, a Georgia non-profit healthcare system. The deal consisted on bonds for the Development Authority of Fulton County, the Cobb County Kennestone Hospital Authority, the Lagrange-Troup County Hospital Authority and the Griffin-Spalding County Hospital Authority. The deal is rated A2 by Moody’s and A by S&P

JPMorgan Securities priced the Chicago Board of Education’s $500 million of unlimited tax dedicated revenues general obligation bonds. The deal was doubled in size from the originally planned $250 million. The deal is unrated.

JPMorgan Securities priced the Aldine Independent School District, Texas’ $378.54 million of Series 2017A unlimited tax school building and refunding bonds. The deal is rated triple-A by Moody’s and S&P.

Raymond James & Associates priced Jefferson County, Ala.'s $341.35 million of Series 2017 limited obligation refunding warrants. The deal is rated AA by S&P and A by Fitch.

Citigroup priced Philadelphia’s $331.75 million of Series 2017 general obligation bonds. The deal is rated A2 by Moody’s, A-plus by S&P and A-minus by Fitch, except for one maturity which was insured by Assured Guaranty Municipal and rated A2 by Moody’s and AA by S&P.

BAML priced the Los Angeles Department of Airports’ $320.14 million of subordinate revenue bonds for the Los Angeles International Airport. The deal is rated A1 by Moody’s and AA-minus by S&P and Fitch.

BAML priced the state of Hawaii’s $249.81 million of Series 2017A taxable airports system customer facility charge revenue bonds. The deal is rated A2 by Moody’s, A-plus by S&P and A by Fitch.

JPMorgan priced the San Diego Unified School District’s $195 million of Series A 2017-2018 tax and revenue anticipation notes. The deal is rated SP1-plus by S&P.

Loop Capital markets priced the city of Dallas’ $171.98 million of Series 2017 waterworks and sewer system revenue refunding bonds for Dallas, Denton, Collin, Kaufman and Rockwall counties. The deal is rated AAA by S&P and AA-plus by Fitch.

Barclays Capital priced the Massachusetts Port Authority’s $169.99 million of Series 2017A revenue bonds, subject to the alternative minimum tax. The deal is rated Aa2 by Moody’s and AA by S&P and Fitch.

BAML priced the Riverside County Transportation Commission, Calif.’s $158.76 million of Series 2017A limited tax sales tax revenue bonds. The deal is rated AA-plus by S&P and AA by Fitch.

BAML priced the Metropolitan Government of Nashville and Davidson County Health and Educational Facilities Board’s $121.27 million of Series 2017A tax-exempt revenue bonds for the Vanderbilt University Medical Center and a $100 million taxable deal for the Medical Center. The deal is rated A3 by Moody's.

In the competitive arena, the Florida Department of Transportation sold $288.71 million of Series 2017A right-of-way acquisition and bridge construction bonds. Wells Fargo Securities won the deal with a true interest cost of 3.32%. The deal is rated Aa1 by Moody’s and AAA by S&P and Fitch.

The Lewisville Independent School District, Texas, sold $202.53 million of Series 2017 unlimited tax school building GOs. BAML won the bonds with a TIC of 2.90%. The deal, which is backed by the Permanent School Fund guarantee program, is rated AAA by S&P and Fitch.

The South Carolina Transportation Infrastructure Bank sold $188.62 million of Series 2017A revenue refunding bonds. JPMorgan Securities won the bonds with a TIC of 3.8996%. The deal is rated A1 by Moody’s and A by Fitch.

The Maryland Transportation Authority sold $164.3 million of Series 2017 tax-exempt transportation facilities projects revenue refunding bonds. Wells Fargo Securities won the bonds with a TIC of 3.08%. The deal is rated Aa3 by Moody’s and AA-minus by S&P and Fitch.

The state of North Carolina sold $107.01 million of Series 2017A general obligation refunding bonds. Citi won the deal with a true interest cost of 1.39%. The deal is rated triple-A by Moody’s, S&P and Fitch.

Four groups won the state of Colorado’s $600 million of Series 2017A general fund tax and revenue anticipation notes. Morgan Stanley won $400 million of the deal, taking $250 million with a bid of 4% and a $7,190,000 premium, an effective rate of 0.917540% and taking $150 million with a bid of 4% and a $4,311,000 premium, an effective rate of 0.919614%; Wells Fargo Securities won $150 million, taking $100 million with a bid of 5% and a $3,810,000 premium, an effective rate of 0.917112% and taking $50 million with a bid of 5% and a $1,919,500 premium, an effective rate of 0.887317%; JPMorgan won $40 million with a bid of 2.50% and a $589,200 premium, an effective rate of 0.920299%; and Barclays Capital won $10 million with a bid of 3% and a $194,100 premium, an effective rate of 0.919022%. The deal is rated MIG1 by Moody’s and SP1-plus by S&P.

One bond deal that didn’t come to market was the Chicago Transit Authority’s $230 million of refunding Series 2017 capital grant receipts revenue bonds, which was delayed for a week. The deal is rated A by S&P and BBB by Fitch.

Bond Buyer reports 30-day visible supply
The Bond Buyer's 30-day visible supply calendar decreased $781.8 million to $8.98 billion on Friday. The total is comprised of $4.06 billion of competitive sales and $4.91 billion of negotiated deals.

Lipper: Muni bond funds see outflows
Investors in municipal bond funds again took cash out of the funds in the latest week, according to Lipper data. The weekly reporters saw $172.555 million of outflows in the week of July 12, after outflows of $458.306 million in the previous week.

The four-week moving average was negative at $256.274 million, after being in the red at $114.416 million in the previous week. A moving average is an analytical tool used to smooth out price changes by filtering out fluctuations.

Long-term muni bond funds had inflows of $77.841 million in the latest week after outflows of $305.061 million in the previous week. Intermediate-term funds had outflows of $145.902 million after outflows of $106.962 million in the prior week.

National funds had outflows of $177.995 million after outflows of $402.531 million in the previous week. High-yield muni funds reported inflows of $75.010 million in the latest reporting week, after outflows of $208.683 million the previous week.

Exchange traded funds saw outflows of $9.757 million, after inflows of $2.624 million in the previous week.

Yvette Shields contributed to this report.

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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.