Municipal bonds finished steady in secondary trading on Thursday, traders said, one day after the Chicago Public Schools postponed what would have been the largest deal of the week.
Secondary Market
The yield on the 10-year benchmark muni general obligation was unchanged from 1.75% on Wednesday, while the 30-year muni yield was steady from 2.77%, according to the final read of Municipal Market Data's triple-A scale.
Treasuries were little changed. The yield on the two-year Treasury dipped to 0.82%, from 0.84% on Wednesday, while the 10-year Treasury yield declined to 1.98% from 2.00% and the 30-year Treasury bond yield was unchanged from 2.79%.
The 10-year muni to Treasury ratio was calculated on Thursday at 88.2% compared with 87.5% on Wednesday, while the 30-year muni to Treasury ratio stood at 99.3% versus 99.2%, according to MMD.
MSRB Reports Activity
The most actively traded securities on Thursday were the state of Illinois GO bonds, according to the Municipal Securities Rulemaking Board.
The Series of January 2016 4s of 2039 traded 109 times, at a high price of 102, a low yield of 3.756%, on volume of $5.65 million, according to the EMMA website. On Wednesday, the 4s of '39 traded 53 times at a high price of 101.669, a low yield of 3.796%, on volume of $5.71 million. The 4% bonds were initially priced last month at 98.082 to yield 4.13%.
Primary Market
Thursday's primary market action came after the CPS pulled its $875 million general obligation bond deal on Wednesday and placed it on day-to-day status. The district's finance officials said the decision was made to give investors more time to digest the deal and the underwriting syndicate time to tinker with an accommodating structure.
In the competitive arena on Thursday, Waco, Texas, competitively sold two issues totaling $109.25 million.
Robert W. Baird won the $82.69 million of Series 2016 combination tax and revenue certificates of obligation with a true interest cost of 2.87%. The issue was priced to yield from 0.65% with a 2% coupon in 2017 to 3.20% with a 3.125% coupon in 2036.
Baird also won the $29.47 million of Series 2016 general obligation refunding bonds with a TIC of 2.92%. The issue was priced to yield from 1.20% with a 2% coupon in 2021 to 3.241% with a 3.125% coupon in 2037.
Both issues were rated Aa2 by Moody's Investors Service and AA-plus by Standard & Poor's.
Cincinnati, Ohio, competitively sold two issues totaling $99.38 million.
Hutchinson Shockey Erley won the $95.77 million of Series 2016A unlimited tax various purposed GO improvement and refunding bonds with a TIC of 2.37%. The issue was priced to yield from 0.40% with a 4% coupon in 2016 to 3.14% with a 3% coupon in 2036.
Baird won the $3.61 million of Series 2016B taxable unlimited tax various purpose GO refunding bonds with a TIC of 2.69%. The issue was priced to yield from 0.85% with a 3% coupon in 2016 to 3.10% with a 3.10% coupon in 2028. Both issues were rated Aa2 by Moody’s and AA-minus by S&P.
JPMorgan priced the Connecticut Health and Educational Facilities Authority's $250 million of Series U revenue bonds for Yale University in a remarketing of two- and five-year put bonds.
The $125 million of Series U-1 bonds were priced at par to yield 1% in 2033 with a mandatory tender in 2019; the $125 million of Series U-2 bonds were priced at par to yield 1% in 2033 with a mandatory tender in 2019.
The issue is rated triple-A by Moody's and S&P.
Tax-Exempt Money Market Funds Post Outflows
Tax-exempt money market funds experienced outflows of $6.06 billion, bringing total net assets to $248.94 billion in the week ended Jan. 25, according to The Money Fund Report, a service of iMoneyNet.com. This followed an outflow of $2.12 billion to $255.00 billion in the previous week.
The average, seven-day simple yield for the 354 weekly reporting tax-exempt funds remained at 0.01% for the 143rd straight week.
The total net assets of the 941 weekly reporting taxable money funds increased $22.13 billion to $2.514 trillion in the week ended Jan. 26, after an outflow of $11.43 billion to $2.492 trillion the prior week.
The average, seven-day simple yield for the taxable money funds remained at 0.08% for a second straight week.
Overall, the combined total net assets of the 1,295 weekly reporting money funds rose $16.06 billion to $2.763 trillion in the period ended Jan. 26, which followed an outflow of $13.56 billion to $2.747 trillion in the prior week.
