Top-shelf municipal bonds were stronger on Friday around midday, as market participants were still going over the details of the GOP tax reform bill.

It was a busy week for the municipal market, in terms of deals and news, with tax reform, a Federal Open Market Committee meeting and the nomination of Jerome Powell as the Fed Reserve Board chair.

Market participants reacted negatively to the proposal in the tax reform bill to eliminate advanced refundings and private activity bonds, saying it would crimp volume and the savings issuers can get when rates fall. Against that backdrop, the Virginia Small Business Financing Authority's $737 million PAB offering received strong demand.

The tax plan, one trader said, could lead to a rush of issuance before yearend so issuers can lock in savings before the rules change.

President Trump announced his nomination of Powell, something widely expected in the past week. Bond markets will not have a huge reaction to the nomination, since it means a likely continuation of the monetary policies of Janet Yellen and Ben Bernanke before her.

Looking ahead to next week, Ipreo estimates volume will rise to $8.99 billion from the revised total of $5.34 billion sold in the past week, according to updated figures from Thomson Reuters. The calendar for the week ahead is composed of $6.62 billion of negotiated deals and $2.37 billion in competitive sales.

Secondary market
Top-shelf municipal bonds were stronger on Friday around lunchtime. The yield on the 10-year benchmark muni general obligation was as much as one basis point lower from 2.00% on Thursday, while the 30-year GO yield was between two and four basis points lower from 2.80%, according to a read of Municipal Market Data's triple-A scale.

U.S. Treasuries were mostly unchanged Friday around midday. The yield on the two-year Treasury was nudged up to 1.62% from 1.61%, the 10-year Treasury yield was flat at 2.35% and yield on the 30-year Treasury was steady at 2.82%.

On Thursday, the 10-year muni-to-Treasury ratio was calculated at 85.2% compared with 83.2% on Wednesday, while the 30-year muni-to-Treasury ratio stood at 98.9% versus 98.6%, according to MMD.

AP-MBIS 10-year muni at 2.303%, 30-year at 2.863%
The Associated Press-MBIS municipal non-callable 5% GO benchmark scale was slightly stronger in trading at midday on Friday.

The 10-year muni benchmark yield fell to 2.303% from 2.318% from the final read on Thursday, according to Municipal Bond Information Services, a national consortium of municipal interdealer brokers. The AP-MBIS 30-year benchmark muni yield declined to 2.863% from 2.872%.

The AP-MBIS benchmark index is a yield curve built on market data aggregated from MBIS member firms and is updated hourly on the Bond Buyer Data Workstation.

Lipper: Muni bond funds see outflows
Investors in municipal bond funds pulled cash out in the latest week, according to Lipper data released late Thursday.

The weekly reporters saw $654.999 million of outflows in the week of Nov. 1, after inflows of $262.006 million in the previous week.

Exchange traded funds reported outflows of $149.284 million, after inflows of $151.373 million in the previous week. Ex-EFTs, muni funds saw $505.715 million of outflows, after inflows of $110.633 million in the previous week.

The four-week moving average was still positive at $46.685 million, after being in the green at $175.351 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 outflows of $635.982 million in the latest week after outflows of $416.137 million in the previous week. Intermediate-term funds had outflows of $835 million after inflows of $527.272 million in the prior week.

National funds had outflows of $221.241 million after outflows of $41.524 million in the previous week.

High-yield muni funds reported outflows of $81.357 million in the latest week, after inflows of $175.779 million the previous week.

Primary market
Looking back on the week that was, the biggest deal of the week, Bank of America Merrill Lynch priced the Virginia Small Business Financing Authority’s $737 million of senior lien private activity revenue bonds for the Transform 66 P-3 Project on Thursday.

Santa Clara County, Calif., sold $294.105 million of general obligation refunding election of 2008 bonds competitively. The deal was won by Wells Fargo with a true interest cost of 3.03%.

BAML also priced Columbus, Ohio’s $185.69 million of various purpose unlimited tax refunding bonds.

RBC Capital Markets priced the Connecticut Housing Finance Authority’s $121.165 million of mortgage finance program bonds.

Bank of America Merrill Lynch priced the Mayor and City Council of Baltimore, Md.’s $226.955 million of general obligation consolidated public improvement and refunding and taxable bonds.

Wells Fargo priced and repriced the County of Guilford, N.C.’s $179.785 million of GO refunding bonds.

JPMorgan priced the School Board of Hillsborough County, Fla.’s $113.99 million refunding certificates of participation for the Master Lease Program.

In the competitive arena, Massachusetts sold $142.64 million of federal highway grant anticipation notes for the Accelerated Bridge Program. Wells Fargo won the bidding with a true interest cost of 2.15%.

Elsewhere, Williamson County, Tenn., sold a total of $125 million in two separate sales.

Morgan Stanley won $50 million of general obligation public improvement school bonds with a TIC of 2.75%.

Morgan Stanley also won the $75 million of county district school bonds with a TIC of 2.79%.

Also, Spokane School District No. 81, Wash., sold a total of $107.045 million of unlimited tax GO bonds in three separate sales.

JPMorgan won the $62.505 million deal with a TIC of 2.65%, PNC Capital Markets won the $27.32 million deal with a TIC of 3.36% and Bank of America Merrill Lynch won the $17.22 million deal with a TIC of 1.12%.

On Tuesday, Citigroup priced and repriced the Phoenix Civic Improvement Corp.’s $364.375 million of senior lien airport revenue and revenue refunding bonds, lowering yields between 3 and 8 basis points from the preliminary scale on Tuesday morning.

Morgan Stanley priced the Massachusetts DFA’s $248.995 million of revenue bonds for The Broad Institute for retail investors, accelerating the institutional pricing, which was originally scheduled for Wednesday.

Data appearing in this article from Municipal Bond Information Services, including the AP-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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Aaron Weitzman

Aaron Weitzman

Aaron Weitzman is a markets reporter for The Bond Buyer, focusing on the sell side of the municipal bond market.