Municipals finish mixed as Phoenix airs, Chicago School deals sell in primary

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A Phoenix airport deal and a sale of notes from the Chicago Public Schools were the highlight of Thursday’s primary market as municipals turned mixed in secondary trade.

Primary market
On Thursday, Barclays Capital priced and repriced the Phoenix Civic Improvement Corp.’s $225.525 million of Series 2018 senior lien airport revenue bonds subject to the alternative minimum tax.

The deal is rated Aa3 by Moody’s Investors Service and AA-minus by S&P Global Ratings.

Bank of America Merrill Lynch priced the Missouri Health and Educational Facilities Authority’s $222.12 million of Series 2018A health facilities revenue bonds for Mercy Health.

The deal is rated Aa3 by Moody’s and AA-minus by S&P.

In the short-term competitive sector, the Chicago Board of Education sold $200 million of Series 2018A tax anticipation notes on Thursday.

JPMorgan Securities won the TANs with a true interest cost of 2.45%.

Financial advisors are PFM Financial Advisors and Columbia Capital Management; the bond counsel are Ice Miller and Pugh Jones Johnson.

“Due to the district's strengthened financial footing, investors have expressed strong interest in CPS-backed securities and the district is able to competitively bid its TANs for the first time in recent memory,” Chicago Public Schools spokesman Michael Passman said in an emailed response to questions about the transaction.

The TANs are not rated.

The Spartanburg County School District No. 7, S.C., sold $127.225 million of general obligation bond anticipation notes.

Bank of America Merrill Lynch won the deal with a TIC of 2.0393%.

The financial advisor is Compass Municipal Advisors and the bond counsel is McNair Law Firm.

The deal is rated MIG1 by Moody’s and SP1-plus by S&P.

Bond sale results

Arizona
Click here for the Phoenix airport repricing

Click here for the Phoenix airport deal

Missouri
Click here for the HEFA pricing

Illinois
Click here for the Chicago Schools sale

South Carolina
Click here for the Spartanburg note sale

Bond Buyer 30-day visible supply at $4.55B
The Bond Buyer's 30-day visible supply calendar decreased $1.62 billion to $4.55 billion for Thursday. The total is comprised of $1.71 billion of competitive sales and $2.84 billion of negotiated deals.

ICI: Long-term muni funds saw $1.31B outflow
Long-term tax-exempt municipal bond funds saw an outflow of $1.310 billion in the week ended Oct. 17, the Investment Company Institute reported.

This followed an outflow of $1.653 billion in the week ended Oct. 10 and outflows of $2 million and $385 million and inflows of $116 million. $30 million, $4 million, $273 million and $531 million in the eight prior weeks.

Taxable bond funds saw an estimated outflow of $4.327 billion in the latest reporting week, after seeing an outflow of $5.484 billion in the previous week.

ICI said the total estimated outflows to long-term mutual funds and exchange-traded funds were $20.821 billion after outflows of $11.353 billion in the prior week.
Secondary market
Municipal bonds were mixed on Thursday, according to a late read of the MBIS benchmark scale. Benchmark muni yields fell less than one basis point in the 10- to 27-year maturities, rose less than a basis point in the one- to eight-year and 28-to 30-year maturities and remained unchanged in the nine-year maturity.

High-grade munis were mostly stronger, with yields calculated on MBIS' AAA scale falling less than one basis point in the nine- to 30-year maturities while rising less than a basis point in the one- to eight-year maturities.

Municipals were steady on Municipal Market Data’s AAA benchmark scale, which showed the yield on both the 10-year muni general obligation and the yield on 30-year muni maturity remaining unchanged.

“Today Puerto Rico’s bonds are mixed. The Commonwealth 8% due 7/1/2035 is down ¼ of a point to $58 ¾ while another GO bond, the 5.50% of 7/1/2032 (74514LTW7 specifically) is up ¾ of a point to $60 ½,” ICE Data Services said in a market comment late Thursday. “The taxable market is slightly firmer along the curve (up to 1bp), except for the 30-year maturities which are unchanged. The broader municipal market is unchanged from yesterday.”

Treasury bonds were weaker as stocks traded higher.

On Thursday, the 10-year muni-to-Treasury ratio was calculated at 86.0% while the 30-year muni-to-Treasury ratio stood at 99.7%, according to MMD. The muni-to-Treasury ratio compares the yield of tax-exempt municipal bonds with the yield of taxable U.S. Treasury with comparable maturities. If the muni/Treasury ratio is above 100%, munis are yielding more than Treasury; if it is below 100%, munis are yielding less.

Previous session's activity
The Municipal Securities Rulemaking Board reported 44,524 trades on Wednesday on volume of $15.36 billion.

New York, California and Texas were the municipalities with the most trades, with the Empire State taking 14.669% of the market, the Golden State taking 13.838% and the Lone Star State taking 10.807%.

Muni money market funds in the green again
Tax-free municipal money market fund assets increased $251.9 million, raising their total net assets to $134.08 billion in the week ended Oct. 22, according to the Money Fund Report, a service of iMoneyNet.com.

The average seven-day simple yield for the 196 tax-free and municipal money-market funds rose to 1.14% from 1.10% last week.

Taxable money-fund assets increased $11.32 billion in the week ended Oct. 23, raising total net assets to $2.707 trillion. The average, seven-day simple yield for the 830 taxable reporting funds increased to 1.79% from 1.77% last week.

Overall, the combined total net assets of the 1,028 reporting money funds rose $11.57 billion to $2.841 trillion in the week ended Oct. 23.
Treasury to sell bills
The Treasury Department said Thursday it will auction $45 billion 91-day bills and $39 billion 182-day discount bills Monday.

The 91s settle Nov. 1, and are due Feb. 1, 2019, and the 181s settle Nov. 1, and are due May 2, 2019.

Currently, there are $64.992 billion 91-days outstanding and no 182s.

Treasury sells $31B 7-year notes
The Treasury Department Thursday auctioned $31 billion of seven-year notes, with a 3% coupon and a 3.074% high yield, a price of 99.537120. The bid-to-cover ratio was 2.39.

Tenders at the high yield were allotted 16.21%. All competitive tenders at lower yields were accepted in full. The median yield was 3.024%. The low yield was 2.688%.

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 Ziad Saba at 212-803-6079 for more information.

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