Munis cheapened slightly on the front of the curve on Thursday, as U.S. Treasury saw continued losses and equities ended lower.
It was another "topsy-turvy day" for munis, said Kim Olsan, senior fixed income portfolio manager at NewSquare Capital. Munis have been weaker on the front end for a few days, leading to a slight inversion of the curve, starting around the 2028 maturities, Olsan said.
"Some of the issues that sold [Wednesday] and today, it looks to be in that 2028 to 2030, 2034 area, where you can get a 2.50% yield, but if you can go a little further and get a 3.00%, that seems to be where inquiry is pushing, and so some of the balances are clogging up in that range," Olsan said. "It's a tough range right now, just with where real yields are. And ratios aren't super cheap. So, [it's] not surprising to see some of the deals stall a little bit there."
New-issue market
In the primary market Thursday, Morgan Stanley priced for the University of Massachusetts Building Authority (Aa2/AA-/AA/) $564.005 million of revenue refunding bonds. The first tranche, $252.415 million Senior Series 2026-1, saw 5s of 11/2026 at 2.50%, 5s of 2031 at 2.72%, 5s of 2036 at 3.08%, 5s of 2041 at 3.49%, and 5s of 2044 at 3.80%, callable 11/2036.
The second tranche, $311.59 million Senior Series 2026-2, saw 5s of 11/2026 at 2.50%, 5s of 2031 at 2.72%, 5s of 2036 at 3.08% and 5s of 2040 at 3.37%, callable 11/2036.
In the competitive market, Round Rock, Texas (/AAA//), sold to J.P. Morgan $100 million of general obligation bonds, with 5s of 8/2027 at 2.52%, 5s of 2031 at 2.67%, 5s of 2036 at 3.14%, 5s of 2041 at 3.54%, 4.125s of 2045 at par and 4.5s of 2051 at par, callable 8/2035.
Fund flows
Investors added $1.02 billion into municipal bond mutual funds in the week ended Wednesday, following $427.5 million of inflows the prior week, according to LSEG Lipper data.
High-yield funds saw inflows of $111.1 million compared to inflows of $74.8 million the previous week.
Tax-exempt municipal money market funds saw outflows of $1.187 billion for the week ending April 20, bringing total assets to $141.805 billion, according to the Money Fund Report, a weekly publication of EPFR.
The average seven-day simple yield for all tax-free and municipal money-market funds was 2.87%.
Taxable money-fund assets saw $27.302 billion pulled, bringing the total to $7.475 trillion.
The average seven-day simple yield was 3.35%.
The SIFMA Swap Index was at 3.62% on Wednesday compared to the previous week's 3.65%.
