Municipal bonds finished unchanged on Thursday, traders said, as the market experienced a quiet, abbreviated session. Trading ended early ahead of the full close on Friday and will begin again on Monday.
Looking ahead, there were no bond deals of over $1 million on the negotiated or competitive calendars until after the start of the new year.
Secondary Market
The yield on the 10-year benchmark muni general obligation was flat from 1.93% on Wednesday, while the 30-year yield was steady from 2.82%, according to the final read of Municipal Market Data's triple-A scale.
Yields were little changed on the week. On Thursday, Dec. 17, the 10-year muni yield stood at 1.95% while the 30-year muni yield was at 2.84%.
"Muni secondary offerings were very limited as dealers hold back inventory, hoping that January re-investment will encourage firm trading this coming week," MMD Senior Market Analyst Randy Smolik wrote in a Thursday market comment.
Treasury bonds were narrowly mixed on Thursday. The yield on the two-year yield rose to 1.00% from 0.99% on Wednesday, while the 10-year Treasury yield fell to 2.25% from 2.26% and the 30-year Treasury yield decreased to 2.97% from 2.99%.
The 10-year muni to Treasury ratio was calculated on Thursday at 85.0% compared to 85.3% on Wednesday, while the 30-year muni to Treasury ratio stood at 94.7% versus 94.1%, according to MMD.
PREPA Bonds Trade Higher on Restructuring Agreement
Late Wednesday, the Puerto Rico Electric Power Authority reached an agreement with MBIA and Assured Guaranty and investor bondholders to restructure the utility's $8.2 billion of debt.
The agreement, which still requires legislative approval by Jan. 22, would cut PREPA's debt by over $600 million, giving a 15% haircut to investors.
In trading on Thursday, PREPA bonds moved sharply higher, according to the Municipal Securities Rulemaking Board.
The most active bonds, the PREPA Series 2007 TT power revenue bond 5s of 2032, were trading at a high price of 61.29 cents on the dollar, a low yield of 9.77%, in nine trades totaling $2.28 million, according to the MSRB's EMMA website. In comparison, the PREPA 5s of 2032 were trading on Wednesday at a high price of 55.503 cents on the dollar, a low yield of 10.851%, in five trades totaling $90,000.
The benchmark Commonwealth general obligation bond 8s of 2035 were trading at a high price of 73.10 cents on the dollar, a low yield of 11.484%, in seven trades totaling $6.36 million. In comparison, the 8s of 2035 were trading on Wednesday at a high price of 70.06 cents on the dollar, a low yield of 12.006%, in six trades totaling $1 million.
In equity trading on Thursday, shares of MBIA Inc. were trading up about 8% while shares of Assured Guaranty Ltd. were around 2.5% higher.
MBIA's unit, National Public Finance Guarantee Corp., insures $1.4 billion of PREPA debt as measured by gross par outstanding, according to Bloomberg data.
The Week's Most Actively Quoted Issues
Puerto Rico and California were some of the most actively quoted names in the week ended Dec. 24, according to data released by Markit.
On the bid side, the Puerto Rico Commonwealth GO 5.5s of 2039 were quoted by nine unique dealers. On the ask side, the California taxable 7.55s of 2039 were quoted by 13 unique dealers. And among two-sided quotes, the Puerto Rico Commonwealth GO 8s of 2035 were quoted by 12 dealers.
The Week's Most Actively Traded Issues
Some of the most actively traded issues by type in the week ended Dec. 24 were in New York, Connecticut and North Carolina, according to Markit.
In the revenue bond sector, the New York City Transitional Finance Authority 5s of 2039 were traded 34 times. In the GO bond sector, the Connecticut 4s of 2028 were traded 23 times. And in the taxable bond sector, the Duke University, N.C.'s 5.85s of 2037 were traded 10 times.
Tax-Exempt Money Market Funds Post Inflows
Tax-exempt money market funds experienced inflows of $2.81 billion, bringing total net assets to $253.60 billion in the week ended Dec. 21, according to The Money Fund Report, a service of iMoneyNet.com. This followed an inflow of $1.27 billion to $250.79 billion in the previous week.
The average, seven-day simple yield for the 359 weekly reporting tax-exempt funds remained at 0.01% for the 138th straight week.
The total net assets of the 942 weekly reporting taxable money funds increased $11.07 billion to $2.513 trillion in the week ended Dec. 22, after an outflow of $17.84 billion to $2.501 trillion the prior week.
The average, seven-day simple yield for the taxable money funds rose to 0.05% from 0.03% in the previous week.
Overall, the combined total net assets of the 1,301 weekly reporting money funds rose $13.88 billion to $2.766 trillion in the period ended Dec. 22, which followed an outflow of $16.57 billion to $2.752 trillion in the prior week.
