Municipal bonds remain firm as Louisiana, North Carolina deals come to market
Municipal bonds showed their strength on Thursday as buyers welcomed more new issue supply into the market, led by issues in Louisiana and North Carolina. Traders said both deals got a warm reception during a supply deprived holiday trading week.
Louisiana competitively sold $306.72 million of Series 2019A GOs. Proceeds will be used to finance various improvement projects.
Bank of America Merrill Lynch won the issue with a true interest cost of 3.2216%.
The financial advisor is Lamont Financial Services; the bond counsel are Breazeale Sachse and Butler Snow.
The deal is rated Aa3 by Moody’s Investors Service and AA-minus by S&P Global Ratings and Fitch Ratings.
Previous to Thursday’s sale, the Pelican State last competitively sold GOs on Sept. 12, 2017, when BAML won the $300.09 million of Series 2017B GOs with a true interest cost of 2.9496%.
Wells Fargo Securities priced and repriced the North Carolina Medical Care Commission’s $166.505 million of healthcare facilities revenue bonds for the Wake Forest Baptist Obligated Group.
The deal is rated A2 by Moody’s and A by S&P.
BAML received the written award on the San Francisco Bay Area Toll Authority’s $126.24 million of Series 2019S-H subordinate toll bridge revenue bonds.
The deal is rated A1 by Moody’s and AA-minus by S&P and Fitch.
RBC Capital Markets received the official award on the San Francisco City and County Airport Commission’s $125 million of special facilities lease revenue bonds for the SFO Fuel Co.
The deal consists of $108.57 million of Series 2019A bonds subject to the alternative minimum tax and $16.43 million of Series 2019B taxable bonds.
The deal is rated A1 by Moody’s and A by S&P.
Thursday’s bond sale
Click here for the state sale
Click here for the Med Care repricing
Click here for the Bay Area Toll award
Bond Buyer 30-day visible supply at $5.4B
The Bond Buyer's 30-day visible supply calendar decreased $25.4 million to $5.4 billion for Thursday. The total is comprised of $2.50 billion of competitive sales and $2.90 billion of negotiated deals.
Municipal bonds were mixed Thursday, according to a late read of the MBIS benchmark scale. Benchmark muni yields fell less than one basis point in the one- to eight-year and 11- to 30-year maturities and rose less than a basis point in the none- and 10-year maturities.
High-grade munis were mostly stronger, according to MBIS, with muni yields falling as much as one basis point in the seven- and eight-year and 11- to 30-year maturities and rising as much as a basis point in the one- to six-year and none- and 10-year maturities.
Investment-grade municipals were weaker on Refinitiv Municipal Market Data’s AAA benchmark scale, which showed the yield on the 10-year muni general obligation rising one basis point while the yield on the 30-year muni maturity rose two basis points.
“Tobaccos are one basis point higher in yield today along with the high-yield sector,” ICE Data Services said in a Thursday market comment. “Taxables are moving higher in yield as they tend to follow Treasuries. Taxable yields are up four basis points to 4.5 basis points from the five-year maturities and longer.”
Treasury bonds were weaker as stock prices traded lower.
On Thursday, the 10-year muni-to-Treasury ratio was calculated at 78.7% while the 30-year muni-to-Treasury ratio stood at 99.0%, 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.
COFINA bonds trading
Some of the restructured Puerto Rico Sales Tax Financing Corp. bonds were again actively trading on Thursday.
The COFINA restructured Series A2 5% bonds of July 1, 2058, dated Aug. 8, 2018, (principal amount of issuance of $763.784 million), were trading at a high price of 100 cents on the dollar and a low price of 80.50 cents, compared to high and low prices of 86.375 cents and 82 cents on Wednesday, 86.691 cents and 79.70 cents on Tuesday and 83.653 cents and 82.75 cents on Friday, according to the Municipal Securities Rulemaking Board’s EMMA website.
Trading volume totaled $3.4 million in 46 trades compared to $12.874 million in 75 trades on Wednesday, $3.234 million in 22 trades on Tuesday and $1.285 million in four trades last Friday, EMMA reported.
The COFINA restructured Series A1 4.5% bonds of July 1, 2034, dated Aug. 8, 2018, (principal amount of issuance of $370.347 million), were trading at a high price of 100 cents on the dollar and a low price of 93.361 cents, compared to high and low prices of 100.25 cents and 96.427 cents on Wednesday, 99.446 cents and 96.50 cents on Tuesday and 99.665 cents and 97.805 cents on Friday, according to EMMA.
Trading volume totaled $27.626 million in 48 trades compared to $42.896 million in 84 trades on Wednesday, $27.977 million in 44 trades on Tuesday and $18.375 million in 15 trades last Friday, EMMA reported.
The COFINA restructured Series A1 5% bonds of July 1, 2058, dated Aug. 8, 2018, (principal amount of issuance of $3.479 billion), were trading at a high price of 100 cents on the dollar and a low price of 94.837 cents, compared to high and low prices of 98.50 cents and 94.05 cents on Wednesday, 98.284 cents and 94.959 cents on Tuesday and 98.637 cents and 95.055 cents on Friday, according to EMMA.
Trading volume totaled $66.184 million in 64 trades compared to $57.341 million in 138 trades on Wednesday, $143.321 million in 103 trades on Tuesday and $166.912 million in 49 trades last Friday, EMMA reported.
Previous session's activity
The Municipal Securities Rulemaking Board reported 42,430 trades on Wednesday on volume of $12.35 billion.
California, New York and Texas were the municipalities with the most trades, with the Golden State taking 13.489% of the market, the Empire State taking 10.702% and the Lone Star State taking 10.208%.
Muni money market funds saw $1.9B outflow
Tax-free municipal money market fund assets decreased $1.19 billion, lowering their total net assets to $137.56 billion in the week ended Feb. 18, according to the Money Fund Report, a service of iMoneyNet.com.
The average seven-day simple yield for the 190 tax-free and municipal money-market funds jumped to 1.21% from 1.10% last week.
Taxable money-fund assets lost $25.02 billion in the week ended Feb. 19, bringing total net assets to $2.877 trillion.
The average, seven-day simple yield for the 804 taxable reporting funds crawled up to 2.05% from 2.04% last week.
Overall, the combined total net assets of the 994 reporting money funds decreased $26.21 billion to $3.014 trillion in the week ended Feb. 19. It marks the seventh consecutive week total money-fund assets have exceeded $3 trillion.
Treasury auctions bills
The Treasury Department Thursday auctioned $50 billion of four-week bills at a 2.390% high yield, a price of 99.814111. The coupon equivalent was 2.428%. The bid-to-cover ratio was 2.83. Tenders at the high rate were allotted 69.17%. The median rate was 2.370%. The low rate was 2.330%.
Treasury also auctioned $35 billion of eight-week bills at a 2.400% high yield, a price of 99.626667. The coupon equivalent was 2.442%. The bid-to-cover ratio was 3.17. Tenders at the high rate were allotted 75.11%. The median rate was 2.390%. The low rate was 2.370%.
Treasury auctions announces sales
The Treasury Department on Thursday announced these auctions:
- $32 billion of seven-year notes selling on Feb. 26;
- $41 billion of five-year notes selling on Feb. 25;
- $40 billion of two-year notes selling on Feb. 25;
- $26 billion of 364-day bills selling on Feb. 26;
- $39 billion of 182-day bills selling on Feb. 25; and
- $48 billion of 91-day bills selling on Feb. 25.
Treasury sells 30-year TIPS
The Treasury Department Thursday sold $8 billion of inflation-indexed 30-year bonds at a 1.093% high yield, an adjusted price of 97.483490, with a 1% coupon. The bid-to-cover ratio was 2.46.
Tenders at the market-clearing yield were allotted 11.69%. Among competitive tenders, the median yield was 1.040% and the low yield was 0.888%, Treasury said.
Gary E. 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.