Munis weak week continues

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Munis will see the last weekly issuance roll in on Thursday - as the past few days haven’t gone as planned, with rising yields and rocky market conditions causing the biggest deal of the week to be postponed.

The week wraps up with a handful of deals in the $100-$300 million range.

Chicago’s $1.3 billion deal from the Sales Tax Securitization Corp., tentatively scheduled to price Wednesday, was moved to the day-to-day calendar.

"The recent market fluctuations resulted in the STSC’s decision to postpone the bond offering until the market normalizes,” said Chicago Finance Dept. spokeswoman Kristen Cabanban. “We will continue to monitor the market and will bring the offering when conditions are most favorable to achieving the greatest savings for taxpayers.”

Late Wednesday, JPMorgan received the written award on what is now the largest deal of the week – the Department of Airports for the city of Los Angeles’ $578 million transaction.

On Thursday, the Orange County, Calif. Sanitation District sold $102.125 million of revenue refunding certificate anticipation notes. Barlcays won with a true interest cost of 2.02%. The deal is rated triple-A by Moody’s Investors Service and Fitch Ratings.

Bond sale results

Los Angeles Department of Airports

OC Sanitation District

Secondary market
Municipal bonds were weaker on Thursday, according to a midday read of the MBIS benchmark scale. Benchmark muni yields rose as much as three basis points in the one- to 30-year maturities.

High-grade munis were mostly weaker, with yields calculated on MBIS' AAA scale rising as much as six basis points in the four- to eight-year and 12- to 30-year maturities. The remaining six maturities saw yields drop by no more than two basis points.

Municipals were weaker on Municipal Market Data’s AAA benchmark scale, which showed the yield on the 10-year muni general obligation rising as many as two basis points while the yield on 30-year muni maturity gained as much as one basis point.

On Wednesday, the 10-year muni-to-Treasury ratio was calculated at 86.7% 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.

Muni money market funds turn red
Tax-free municipal money market fund assets decreased $17.5 million, lowering their total net assets to $134.07 billion in the week ended Oct. 29, 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 inched up to 1.16% from 1.14% last week.

Taxable money-fund assets increased $5.04 billion in the week ended Oct. 30, raising total net assets to $2.712 trillion.

The average, seven-day simple yield for the 830 taxable reporting funds crawled up to 1.80% from 1.79% last week.

Overall, the combined total net assets of the 1,028 reporting money funds rose $5.02 billion to $2.846 trillion in the week ended Oct. 30.

Previous session's activity
The Municipal Securities Rulemaking Board reported 44,753 trades on Wednesday on volume of $14.124 billion.

California, New York and Texas were the municipalities with the most trades, with the Golden State taking 18.326% of the of the market, the Empire State taking 12.177% and the Lone Star State taking 9.674%.

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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Primary bond market Secondary bond market Chicago Sales Tax Securitization Corp Los Angeles Department of Airports State of California State of New York State of Texas
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