Top quality municipal bonds ended stronger on Thursday, according to traders, as the last of the week's big new issue slate came to market.
Secondary Trading
Activity slowed late in the session with interest in the muni market waning as some traders focused on the NCAA basketball tournament and St. Patrick's Day celebrations.
The yield on the 10-year benchmark muni general obligation fell three basis points to 1.85% from 1.88% on Wednesday, while the 30-year muni yield dropped four basis points to 2.80% from 2.84%, according to the final read of Municipal Market Data's triple-A scale.
U.S. Treasuries were stronger on Thursday. The yield on the two-year Treasury dropped to 0.87% from 0.89% on Wednesday, while the 10-year Treasury yield declined to 1.90% from 1.94% and the 30-year Treasury bond yield decreased to 2.69% from 2.74%.
The 10-year muni to Treasury ratio was calculated on Thursday at 97.3% compared to 97.1% on Wednesday, while the 30-year muni to Treasury ratio stood at 103.9% versus 103.9%, according to MMD.
Primary Market
JPMorgan Securities priced the Metropolitan Government of Nashville and Davidson County, Tenn.'s Health and Educational Facilities' $784 million issue.
The $483.995 million of Series 2016A revenue bonds for the Vanderbilt University Medical Center were priced for institutions after a one-day retail order period. The issue was priced as 5s to yield 3.00% in 2029, 3.07% in 2030, 3.15% in 2031, 3.40% in 2035, 3.58% in 2040 and 3.66% in 2046. On Wednesday, the Series 2016A bonds were priced for retail as 5s to yield 3.14% in 2029 and 3.21% in 2030. No retail orders were taken in the 2031, 2035, 2040 or 2046 maturities.
JPMorgan also priced on Thursday the Med Center's $300 million of Series 2016B taxable revenue bonds at par to yield 4.053%. All bonds are rated A3 by Moody's Investors Service.
Hilltop Securities priced the Tohopekaliga Water Authority, Fla.'s $173.80 million of Series 2016 utility system revenue and revenue refunding bonds.
The issue was priced to yield from 0.70% with a 2% coupon in 2017 to 3.19% with a 4% coupon in 2036; a 2041 maturity was priced as 4s to yield 3.38% and a 2046 maturity was priced as 5s to yield 3.08%. The issue is rated AA-plus by Standard & Poor's and Fitch Ratings.
Wells Fargo Securities priced the Santa Clara Valley Water District, Calif.'s $150.42 million of Series 2016A water system refunding revenue bonds and Series 2016C revenue certificates of participation for water utility system improvement projects.
The $107.21 million of Series 2016A bonds were priced as 5s to yield from 2.33% in 2029 to 2.72% in 2036 and to yield 2.86% in 2041 and 2.92% in 2046. The $43.21 million of Series 2016C COPs were priced to yield from 0.73% with a 4% coupon in 2018 to 2.33% with a 5% coupon in 2029. The deal is rated Aa1 by Moody's and AA by Fitch Ratings.
Bank of America Merrill Lynch priced the Indiana Finance Authority's $103.37 million all-green bond issue.
The $50 million of Series 2016A state revolving fund program bonds were priced as 5s to yield from 0.55% in 2017 to 2.75% in 2036. The $53.37 million of Series 2016B state revolving fund program refunding bonds were priced as 5s to yield 1.08% in 2020, 1.24% in 2021, 1.39% in 2022, 2.15% in 2027 and 2.23% in 2028. The bonds were rated triple-A by Moody's, S&P and Fitch.
Tax-Exempt Money Market Funds Post Outflows
Tax-exempt money market funds experienced outflows of $3.09 billion, bringing total net assets to $236.72 billion in the week ended March 14, according to The Money Fund Report, a service of iMoneyNet.com. This followed an inflow of $831.8 million to $239.81 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 150th straight week.
The total net assets of the 940 weekly reporting taxable money funds decreased $43.55 billion to $2.547 trillion in the week ended March 15, after an inflow of $24.99 billion to $2.590 trillion in the prior week.
The average, seven-day simple yield for the taxable money funds rose to 0.11% from 0.10% where it was for the past five weeks.
Overall, the combined total net assets of the 1,294 weekly reporting money funds decreased $46.64 billion to $2.783 trillion in the period ended March 15, which followed an inflow of $25.82 billion to $2.830 trillion.
