Top-rated municipal bonds finished mixed on Thursday as the yield on Municipal Market Data's triple-A 30-year general obligation scale dropped to a record low for a second straight day.
On Thursday, the yield on 30-year muni general obligation fell one basis point to 2.44%, according to the final read of MMD's triple-A scale. On Wednesday, the 30-year muni fell to 2.45%, eclipsing its previous record low of 2.47% set in November 2012, according to MMD Senior Market Analyst Randy Smolik.
Meanwhile, the yield on the 10-year benchmark muni rose one basis point on Thursday, to 1.54% from 1.53% on Wednesday. Its all-time low, also set back in November 2012, is 1.47%, according to MMD.
In late trading on Thursday, U.S. Treasuries were weaker. The yield on the two-year Treasury rose to 0.76% from 0.72% on Wednesday, while the 10-year Treasury yield gained to 1.75% from 1.73% and the yield on the 30-year Treasury bond increased to 2.61% from 2.57%.
The 10-year muni to Treasury ratio was calculated at 87.6% on Thursday compared with 88.3% on Wednesday, while the 30-year muni to Treasury ratio stood at 93.4% versus 95.0%, according to MMD.
Primary Market
JPMorgan Securities priced and repriced the Central Texas Regional Mobility Authority's $368.71 million of Series 2016 senior lien revenue refunding bonds on Thursday.
The issue was repriced as 5s to yield from 1.13% in 2020 to 2.85% in 2036; a 2040 maturity was priced as 5s to yield 2.93%, a 2041 maturity was priced as 3 3/8s to yield approximately 3.50% and a 2046 maturity was priced as 5s to yield 3.00%.
Traders said the deal was met with an excellent reception, allowing underwriters to cut yields by as much as 13 basis points.
"We opened at 9 a.m. and were done by 10, as we were 11.2 times oversubscribed," said Bill Chapman, chief financial officer of the CTRMA. "For the 2046 maturity we were 18 times over. I think a lot of investors have cash. They're looking for yield, and all of our metrics are pretty good."
Chapman also noted that demand for this sale was similar to that of last November's sale, with the only difference being that last November produced better results in terms of interest rates.
This deal is rated Baa2 by Moody's Investors Service and BBB-plus by S&P Global Ratings, both of which have stable outlooks on the credit.
JPMorgan also priced and repriced the Cape Fear Public Utility Authority, N.C.'s $155.9 million of Series 2016 water and sewer system refunding revenue bonds.
The issue was priced to yield from 0.50% with a 2% coupon in 2016 to 2.65% with a 3.50% coupon in 2034. The deal is rated Aa1 by Moody's and AA-plus by S&P.
The authority doesn't issue bonds very often. Since 2011, it has only sold two other issues totaling $109.2 million.
Bank of America Merrill Lynch priced and repriced the Southwest Higher Education Authority, Inc.'s $116.71 million of Series 2016A tax-exempt higher education revenue bonds for Southern Methodist University. The deal was repriced to yield from 1.05% with a 5% coupon in 2020 to 2.81% with a 4% coupon in 2035; a 2040 maturity was priced as 5s to yield 2.69% and a 2045 maturity was priced as 5s to yield 2.79%. The deal is rated Aa3 by Moody's and AA-minus by Fitch.
The authority also came to market with a taxable piece. JPMorgan priced the $25.25 million of the authority's Series 2016B taxable revenue bonds at par to yield from 2.262% in 2023 to 3.419% in 2031.
Both deals are rated Aa3 by Moody's and AA-minus by Fitch.
Tax-Exempt Money Market Funds See Outflows
Tax-exempt money market funds experienced outflows of $1.10 billion, bringing total net assets to $214.94 billion in the week ended May 9, according to The Money Fund Report, a service of iMoneyNet.com. This followed an outflow of $1.71 billion to $216.04 billion in the previous week.
The average, seven-day simple yield for the 296 weekly reporting tax-exempt funds fell to 0.05% from 0.06% in the previous week.
The total net assets of the 892 weekly reporting taxable money funds increased $10.54 billion to $2.494 trillion in the week ended May 10, after an inflow of $6.88 billion to $2.483 trillion the week before.
The average, seven-day simple yield for the taxable money funds was unchanged from 0.10% in the prior week.
Overall, the combined total net assets of the 1,188 weekly reporting money funds increased $9.44 billion to $2.709 trillion in the period ended April 26, which followed an inflow of $5.17 billion to $2.699 trillion.
