Munis continue to strengthen as last of week’s bond supply sells

Municipal bonds were trading stronger at mid-session as the last of this week’s larger new issue deals hit traders' screens.

Secondary market

The yield on the 10-year benchmark muni general obligation fell as much as two basis points from 2.02% on Wednesday, while the 30-year GO yield dropped as much as two basis points from 2.88%, according to a read of Municipal Market Data's triple-A scale.

U.S. Treasuries were mixed on Thursday. The yield on the two-year Treasury rose to 1.26% from 1.24% on Wednesday as the 10-year Treasury yield gained to 2.22% from 2.21% while the yield on the 30-year Treasury bond was unchanged from 2.90%.

On Wednesday, the 10-year muni to Treasury ratio was calculated at 91.1%, compared with 89.9% on Tuesday, while the 30-year muni to Treasury ratio stood at 99.3%, versus 99.0%, according to MMD.

MSRB: Previous session's activity
The Municipal Securities Rulemaking Board reported 47,313 trades on Wednesday on volume of $18.18 billion.

Primary market
Bank of America Merrill Lynch priced the city of Charlotte, N.C.’s $305.8 million of airport revenue bonds for the Charlotte Douglas International Airport on Thursday.

The $168.45 million of Series 2017A bonds not subject to the alternative minimum tax were priced as 5s to yield from 1.09% in 2019 to 3.12% in 2037; a 2042 maturity was priced as 5s to yield 3.21% and a 2047 maturity was priced as 5s to yield 3.26%.

The $16.37 million of Series 2017B AMT bonds were priced as 5s to yield from 1.24% in 2019 to 3.37% in 2037; a 2042 maturity was priced as 5s to yield 3.46% and a 2047 maturity was priced as 5s to yield 3.51%.

The bonds are rated Aa3 by Moody’s Investors Service and AA-minus by Fitch Ratings. Both rating agencies assign a stable outlook to the credit.

Since 2007, Charlotte has sold roughly $4.91 billion of bonds, with the largest issuance occurring in 2009 when it sold $1.13 billion.

The Queen City has sold less than $1 billion every year other than 2009, with the smallest issuance in 2012 when it sold $196 million. With Thursday’s sale, the city has already issued more bonds in 2017 than it did in all of last year.

BB-051917-MUN

RBC Capital Markets received the official award on the Frisco Independent School District, Texas’ $206.45 million of Series 2017 unlimited tax school building and refunding bonds.

The issue was priced to yield from 0.90% with a 2% coupon in 2018 to 3.30% with a 4% coupon in 2037; a 2042 maturity was priced as 4s to yield 3.44% and a 2047 maturity was priced as 4s to yield 3.52%.

The deal, which is backed by the Permanent School Fund guarantee program, is rated triple-A by Moody’s and S&P.

Goldman Sachs received the written award on the Massachusetts Development Finance Agency’s $103.24 million of revenue bonds for Williams College.

The $52.77 million of Series 2017S bonds were priced as 5s to yield from 1.45% in 2023 to 2.43% in 2030; a 2046 maturity was priced as 4s to yield 3.46%.

The $50.47 million of Series 2011N bonds were priced as a remarketing at par to yield 1.45% in 2041 with a mandatory tender date in 2021.

The deal is rated Aa1 by Moody’s and AA-plus by S&P.

Citigroup is set to price the Tennessee Housing Development Agency’s $175 million of residential finance program bonds for institutions after holding a one-day retail order period on the offering.

The $23.11 million of Issue 2017-2A bonds subject to the alternative minimum tax were not priced for retail.

The $151.89 million of Issue 2017-2B non-AMT bonds were priced at par to yield from 1.10% and 1.15% in a split 2019 maturity to 3.15% in 2030, and to yield 3.40% in 2032 and 3.70% in 2036. The split 2018 maturities were offered as sealed bids while the 2042 maturity was not priced for retail.

The deal is rated Aa1 by Moody’s and AA-plus by S&P Global Ratings.

RBC is expected to price the Colorado Education and Cultural Facilities Authority’s $149.66 million of revenue bonds for the University of Denver.

The offering consists of Series 2017A tax-exempts and Series 2017B taxables.

Bond Buyer 30-day visible supply
The Bond Buyer's 30-day visible supply calendar decreased $2.21 billion to $11.83 billion on Thursday. The total is comprised of $3.76 billion of competitive sales and $8.07 billion of negotiated deals.

Tax-Exempt Money Market Fund outflows
Tax-exempt money market funds experienced outflows of $210.1 million, lowering total net assets to $129.51 billion in the week ended May 15, according to The Money Fund Report, a service of iMoneyNet.com.

This followed an inflow of $1.17 million to $129.72 billion in the previous week.

The average, seven-day simple yield for the 232 weekly reporting tax-exempt funds decreased to 0.33% from 0.37% from the previous week.

The total net assets of the 856 weekly reporting taxable money funds decreased $6.91 billion to $2.483 trillion in the week ended May 16, after an outflow of $5.24 billion to $2.490 trillion the week before.

The average, seven-day simple yield for the taxable money funds was changed at 0.44% from the prior week.

Overall, the combined total net assets of the 1,088 weekly reporting money funds decreased $7.12 billion to $2.613 trillion in the week ended May 16, after outflows of $4.07 billion to $2.620 trillion in the prior week.

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