Municipal bonds were stronger on Friday as the market looks ahead to next week’s holiday-lite new issue calendar as secondary trading will end early ahead of the long holiday weekend.
Markets will be closed on Monday for the Memorial Day holiday and will reopen on Tuesday.
Ipreo estimates volume for next week at $4.83 billion, down from a revised total of $7.17 billion sold this week, according to updated figures from Thomson Reuters. Next week’s calendar is composed of $3.28 billion of negotiated deals and $1.55 billion of competitive sales.
The yield on the 10-year benchmark muni general obligation fell as much as one basis point from 1.96% on Thursday, while the 30-year GO yield dropped one to three basis points from 2.82%, according to a read of Municipal Market Data's triple-A scale.
U.S. Treasuries were mixed on Friday. The yield on the two-year Treasury was unchanged from 1.29% on Thursday as the 10-year Treasury yield dipped to 2.24% from 2.25% while the yield on the 30-year Treasury bond decreased to 2.90% from 2.92%.
On Thursday, the 10-year muni to Treasury ratio was calculated at 87.0%, compared with 87.0% on Wednesday, while the 30-year muni to Treasury ratio stood at 96.5%, versus 96.2%, according to MMD.
Week's actively traded issues
Some of the most actively traded bonds by type in the week ended May 26 were from New York, Maryland and Florida York issuers, according to Markit.
In the GO bond sector, the Albany County, N.Y., 4s of 2018 were traded 53 times. In the revenue bond sector, the Baltimore, Md., Convention Center 5s of 2046 were traded 50 times. And in the taxable bond sector, the Florida Catastrophe 2.995s of 2020 were traded 19 times.
Week's actively quoted issues
Puerto Rico, New York and California names were among the most actively quoted bonds in the week ended May 26, according to Markit.
On the bid side, the Puerto Rico GO 5s of 2041 were quoted by 71 unique dealers. On the ask side, the New York Metropolitan Transportation Authority revenue 4s of 2034 were quoted by 176 unique dealers. And among two-sided quotes, the California taxable 7.55s of 2039 were quoted by 25 unique dealers.
MSRB: Previous session's activity
The Municipal Securities Rulemaking Board reported 40,596 trades on Thursday on volume of $12.58 billion.
Week’s primary market
Goldman Sachs priced the Hudson Yards Infrastructure Corp., N.Y.’s $2.12 billion of tax-exempt Fiscal 2017 Series A second indenture revenue bonds.
The HYIC also competitively sold $33.36 million of taxable Fiscal 2017 Series B bonds. Wells Fargo Securities won the issue with a true interest cost of 2.47%.
The deals are rated Aa3 by Moody's Investors Service and A-plus by both S&P Global Ratings and Fitch Ratings. All three rating agencies assign stable outlooks to the credit.
Proceeds of the sale will be used to currently refund all outstanding Series 2007 first indenture bonds and advance refund a portion of the Series 2012 first indenture bonds.
During the two-day retail order period for the tax-exempts, HYIC received about $509 million of retail orders, of which $468 million was usable, according to the New York City Comptroller’s Office.
Additionally, HYIC received $7.6 billion of priority orders from over 150 institutional investors, representing an oversubscription of 4.5 times for sale.
“As a result of strong investor demand, yields were reduced by 2-4 basis points for maturities in 2022-2031 and 5-9 basis points for maturities in 2032-2046. Final stated yields ranged from 1.28% in 2022 to 3.43% in 2044 for a 4% coupon bond and 3.13% in 2045 for a 5% coupon bond,” the comptroller’s office said.
In conjunction with the sale of Series 2017 Bonds, the Series 2012 first indenture bonds were upgraded to Aa3 from A2 by Moody’s, to AA-minus from A by S&P and to AA-minus from A by Fitch.
Piper Jaffrey priced the Mayor and City Council of Baltimore’s Convention Center Hotel, Md.’s $268.76 million of Series 2017 revenue refunding bonds. The deal is rated BBB-minus by S&P.
Bank of America Merrill Lynch priced the California Municipal Finance Authority’s $234.09 million of Series 2017A revenue refunding bonds for the Eisenhower Medical Center. The deal is rated Baa2 by Moody’s and BBB by Fitch.
Stifel priced the California Pollution Control Financing Authority’s $220 million of Series 2017 solid waste disposal revenue green bonds for the CalPlant 1 project. The issue is not rated.
Raymond James & Associates priced the Metropolitan Government of Nashville and Davidson County, Tenn.’s $185 million of Series 2017 A&B electric system revenue and refunding bonds. The deal is rated AA-plus by S&P and Fitch.
JPMorgan Securities priced the Philadelphia Authority for Industrial Development, Pa.’s $179.08 million of Series 2017 hospital revenue bonds for the Children’s Hospital of Philadelphia. The deal is rated Aa2 by Moody’s and AA by S&P.
Wells Fargo priced the Virginia Housing Development Authority’s $150.08 million of Series 2017A taxable pass-through commonwealth mortgage bonds. The deal is rated triple-A by Moody’s and S&P.
Wells Fargo priced Clark County, Nev.’s $150 million of Series 2017 indexed fuel tax and subordinate motor vehicle fuel tax highway revenue bonds. The deal is rated Aa3 by Moody’s and AA-minus by S&P.
Citigroup priced the Northside Independent School District, Texas’s $100 million of Series 2017 variable-rate unlimited tax school building bonds while Raymond James priced the district’s $86.87 million of Series 2017 unlimited tax school building and refunding bonds. The deals, which are backed by the Permanent School Fund guarantee program, are rated triple-A by Moody’s and Fitch.
In the competitive arena, the San Francisco Municipal Transportation Agency sold $177.83 million of Series 2017 revenue bonds. Wells Fargo won the bonds with a true interest cost of 3.33%. The deal is rated Aa2 by Moody’s Investors Service and AA by S&P Global Ratings.
Fort Worth, Texas, competitively sold $111.67 million of Series 2017 water and sewer system revenue refunding and improvement bonds. BAML won the bonds with a TIC of 3.34%. The deal is rated Aa1 by Moody’s, AA-plus by S&P and AA by Fitch.
Bond Buyer 30-day visible supply
The Bond Buyer's 30-day visible supply calendar increased $925.3 million to $11.09 billion on Friday. The total is comprised of $4.37 billion of competitive sales and $6.72 billion of negotiated deals.
Lipper: Muni bond funds see inflows
Investors in municipal bond funds continued to put cash back into the funds in the latest week, according to Lipper data released late on Thursday.
The weekly reporters saw $394.498 million of inflows in the week ended May 24, after inflows of $426.721 million in the previous week.
The four-week moving average was still in the green at positive $388.683 million, after being positive at $326.188 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 also had inflows, gaining $238.275 million in the latest week after rising $280.582 million in the previous week. Intermediate-term funds had inflows of $8.640 million after inflows of $5.202 million in the prior week.
National funds had inflows of $447.135 million after inflows of $443.455 million in the previous week. High-yield muni funds reported inflows of $171.583 million in the latest reporting week, after inflows of $214.464 million the previous week.
Exchange traded funds saw inflows of $50.978 million, after inflows of $98.138 million in the previous week.