New York issuers sold $890 million of bonds Thursday, to close out the biggest week of the year in terms of municipal volume.

Strong liquidity on the bid side of the market and selling pressure in the intermediate slope of the yield curve were two themes driving the market this week, according to a Charlotte, N.C., municipal trader.

This week's issuance was the largest the market has seen so far this year, which has been like a desert wasteland after issuers' mad dash to sell bonds late last year before tax law changes took effect.

“Most new issues have received very good reception,” the trader said on Thursday afternoon. He cited the $2.1 billion California general obligation deal, the $929.5 million Oklahoma Development Finance Authority health deal, and a $463.7 million Arlington, Texas, stadium offering, as the most sought-after issues of the week.

While new-issue business provided support in the primary market, the secondary market is the opposite with business and turnover "somewhat slow for most dealers,” he said. “It’s a fairly tight market, nothing really changing week over week.”

The yield curve has steepened slightly on coupon structures between 3% and 5% beyond 20 years, he said.

“Credit spreads remain in check and there hasn’t been really a lot of yieldier stuff in that A-rated space -- not a lot out for the bid,” he said.

There has been some movement in ratios, but nothing that would constitute using that as a “key variable” to gauge market conditions.

“Ratios have gone back and forth with Treasuries being more volatile recently and munis have held in check for the most part,” he said. For a 10 or 15 basis-point swing in Treasuries, municipal yields have only adjusted one to two basis points, he said.

Primary market
The New York City Municipal Water Finance Authority sold $475 million of bonds in two sales.

Jefferies won the $275 million of Fiscal 2018 Series DD Subseries DD-1 water and sewer system second general resolution revenue bonds with a true interest cost of 4.0157%.

Morgan Stanley won the $200 million of Fiscal 2018 Series DD Subseries DD-2 water and sewer system second general resolution revenue bonds with a TIC of 3.7401%.

New York State sold $215.23 million of bonds in three sales, the first appearance in the competitive arena since 2015.

Wells Fargo Securities won the $167.06 million of Series 2018A tax-exempt general obligation bonds with a TIC of 2.1039%.

Piper Jaffray won the $36.82 million of Series 2018B taxable GOs with a TIC of 3.0514%.

And UBS won the $11.35 million of Series 2018C tax-exempt GO refunding bonds with a TIC of 2.0573%.

Thursday’s bond sales
NYC bonds:
https://assets.sourcemedia.com/f9/b2/703a72f24144865a0b0c77df54fd/nycmwfap-030818.doc

NYS bonds:
https://assets.sourcemedia.com/30/d1/d0e6c95f47c999e8c04e6d41e1fa/nys167p-030818.doc

Mich. bonds:
https://assets.sourcemedia.com/e9/a9/8f64bc5343c79a9d1282ce20661b/michp-030818.doc

ICI: Long-term muni funds see $112M inflow
Long-term municipal bond funds saw an inflow of $112 million in the week ended Feb. 28, the Investment Company Institute reported on Wednesday.

This followed an inflow of $481 million into the tax-exempt mutual funds in the week ended Feb. 21 and outflows of $640 million in the week ended Feb. 14 and $588 million in the week ended Feb. 7 and an inflow of $1.84 billion in the week ended Jan. 31.

Taxable bond funds saw estimated inflows of $5.08 billion in the latest reporting week, after experiencing inflows of $3.97 billion in the previous week.

ICI said the total estimated inflows to all long-term mutual funds and exchange-traded funds were $16.75 billion for the week ended Feb. 28.

Tax-exempt money market funds saw outflows
Tax-exempt money market funds experienced outflows of $1.61 billion, lowering total net assets to $135.99 billion in the week ended March 6, according to The Money Fund Report, a service of iMoneyNet.com. This followed an outflow of $306.6 million on to $137.60 billion in the previous week.

The average, seven-day simple yield for the 198 weekly reporting tax-exempt funds increased to 0.64% from 0.63% the previous week.

The total net assets of the 830 weekly reporting taxable money funds decreased $2.64 billion to $2.677 trillion in the week ended March 7, after an inflow of $14.20 billion to $2.679 trillion the week before.

The average, seven-day simple yield for the taxable money funds increased to 1.06% from 1.04% from the prior week.

Overall, the combined total net assets of the 1,028 weekly reporting money funds decreased $4.24 billion to $2.813 trillion in the week ended March 7, after inflows of $13.89 billion to $2.817 trillion in the prior week.

Previous session's activity
The Municipal Securities Rulemaking Board reported 44,109 trades on Wednesday on volume of $14.15 billion.

California, New York and Texas were the states with the most trades, with the Golden State taking 19.019% of the market, the Empire State taking 9.152% and the Lone Star State taking 7.96%.

Treasury announces next week’s sales
The Treasury Department Thursday announced these auctions:

  • $21 billion of 29-year 11-month bonds selling on March 13;
  • $21 billion of nine-year 11-month notes selling on March 12;
  • $28 billion of three-year notes selling on March 12;
  • $45 billion of 182-day bills selling on March 12; and
  • $51 billion 91-day bills selling on March 12.

Gary Siegel contributed to this market 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.

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Christine Albano

Christine Albano

Christine Albano is a reporter in the Investor’s & Investing beat, which she has covered for the past two decades. She has a wide range of buy side sources in the municipal market.
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.