The municipal bond market is looking ahead to next week’s $7.17 billion new issue slate which is dominated by big deals from Chicago and Connecticut.
In secondary trade, munis were coming under pressure as Treasuries weakened on fears of a possible government shutdown.
The MBIS municipal non-callable 5% GO benchmark scale was mixed in early trading.
The 10-year muni benchmark yield fell to 2.355% on Friday from the final read of 2.359% on Thursday, according to Municipal Bond Information Services. The MBIS 30-year benchmark muni yield rose to 2.841% from 2.835%.
The MBIS benchmark index is updated hourly on the Bond Buyer Data Workstation.
U.S. Treasuries were weaker in early activity. The yield on the two-year Treasury rose to 2.06% on Thursday from 2.04% on Thursday, the 10-year Treasury yield gained to 2.64% from 2.61% and the yield on the 30-year Treasury increased to 2.92% from 2.89%.
Top-rated municipal bonds finished weaker on Thursday. The yield on the 10-year benchmark muni general obligation rose two basis points to 2.12% from 2.10% on Wednesday, while the 30-year GO yield gained two basis points to 2.71% from 2.69%, according to the final read of MMD’s triple-A scale.
On Thursday, the 10-year muni-to-Treasury ratio was calculated at 81.3% compared with 78.0% on Wednesday, while the 30-year muni-to-Treasury ratio stood at 93.9% versus 92.6%, according to MMD.
MSRB: Previous session's activity
The Municipal Securities Rulemaking Board reported 45,524 trades on Thursday on volume of $12.80 billion.
Texas, California and New York made up the top three states with the most trades on Thursday with the Lone Star State taking 14.698% of the market, the Golden State taking 12.675% and the Empire State taking 10.942%.
Week’s primary market
The biggest deal of the week – the Sales Tax Securitization Corp.’s $898.07 million of Series 2018A sales tax securitization bonds was delayed until next week.
The deal, rated AA by S&P Global Ratings, and AAA by Fitch Ratings and Kroll Bond Rating Agency, will be priced by Goldman Sachs.
Loop Capital Markets priced Cook County, Ill.’s $103.15 million of Series 2018 GO refunding bonds. The deal is rated A2 by Moody’s, AA-minus by S&P and A-plus by Fitch.
Piper Jaffray priced the Pasadena Independent School District, Texas’ $120.095 million of Series 2018 unlimited tax school building bonds. The deal is backed by the Permanent School Fund guarantee program and rated triple-A by Moody’s and S&P.
JPMorgan Securities priced the Orlando Utilities Commission, Fla.’s $150.18 million of Series 2018A utility system revenue bonds. The deal is rated Aa2 by Moody’s and AA by S&P and Fitch.
In the competitive arena, the New York Metropolitan Transportation Authority sold $471.31 million of mandatory tender bonds in two separate sales. Bank of America Merrill Lynch won the $276.61 million of Series 2018A-2 transportation revenue bonds with a true interest cost of 1.9074%. BAML also won the $194.7 million of Subseries 2018A-1 transportation revenue bonds with a TIC of 1.7972%. The deals are rated A1 by Moody’s Investors Service and AA-minus by S&P Global Ratings and Fitch Ratings and AA-plus Kroll Bond Rating Agency.
The N.Y. MTA also sold $500 million of Series 2018A transportation revenue bond anticipation notes, due Aug. 15, 2019, to five groups.
Citigroup won $200 million, taking $100 million with a bid of 4% and a $3,609,000 premium, an effective rate of 1.651290% and took $100 million with a bid of 4% and a $3,584,000 premium, an effective rate of 1.667220%.
Jefferies won $100 million with a bid of 4% and a premium of $3,590,002, an effective rate of 1.663400%. Morgan Stanley won $100 million, taking $50 million with a bid of 4% and a premium of $1,789,500, an effective rate of 1.670410% and took $50 million with a bid of 4% and a premium of 1,788,000, an effective rate of 1.672320%.
JPMorgan won $75 million, taking $50 million with a bid of 4% and a premium of $1,793,000, an effective rate of 1.665950% and taking $25 million with a bid of 4% and a $892,750 premium, an effective rate of 1.675510%. Goldman Sachs won $25 million with a bid of 4% and a premium of $901,500, an effective rate of 1.653200%.
The BANs are rated MIG1 by Moody’s, SP1-plus by S&P, F1-plus by Fitch and K1-plus by Kroll.
The University of Kentucky sold $210.56 million of Series 2018A general receipt bonds. Wells Fargo Securities won the bonds with a true interest cost of 3.31%. The deal is rated Aa2 by Moody’s and AA by S&P.
The Prior Lake Independent School District No. 719, Minn., sold $125 million of GOs in two separate sales. Morgan Stanley won the $65 million of Series 2018A GO school building bonds with a TIC of 3.1758% and Wells Fargo Securities won the $60 million of Series 2018B GO school building capital appreciation bonds with a TIC of 2.7620%. The deals are backed by the Minnesota School District Credit Enhancement Program.
The Sheldon Independent School District, Texas, competitively sold $98.665 million of Series 2018 unlimited tax school building and refunding bonds. UBS won the bonds with a TIC of 3.38%. The deal is backed by the PSF and rated Aaa by Moody’s.
Bond Buyer 30-day visible supply at $9.36B
The Bond Buyer's 30-day visible supply calendar increased $2.18 billion to $9.36 billion on Friday. The total is comprised of $2.20 billion of competitive sales and $7.16 billion of negotiated deals.
Lipper: Muni bond funds saw inflows
Investors in municipal bond funds again put cash into the funds in the latest week, according to Lipper data released on Thursday.
The weekly reporters saw $1.18 billion of inflows in the week of Jan. 17, after inflows of $1.06 billion in the previous week.
Exchange traded funds reported inflows of $118.046 million, after inflows of $22.703 million in the previous week. Ex-ETFs, muni funds saw $1.06 billion of inflows, after inflows of $1.04 billion in the previous week.
The four-week moving average was positive at $503.830 million, after being in the green at $271.840 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 $1.099 billion in the latest week after inflows of $1.12 billion in the previous week. Intermediate-term funds had inflows of $178.692 million after inflows of $360.123 million in the prior week.
National funds had inflows of $1.14 billion after inflows of $988.826 million in the previous week.
High-yield muni funds reported inflows of $206.925 million in the latest week, after inflows of $365.937 million the previous week.
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.