Top rated municipal bonds finished weaker on Thursday, traders said, with yields on some longer-dated maturities rising by as much as five basis points.
The yield on the 10-year benchmark muni general obligation increased five basis points to 1.64% on Thursday from 1.59% on Wednesday, while the 30-year muni yield jumped five basis points to 2.58% from 2.53%, according to the final read of the Municipal Market Data's triple-A scale.
U.S. Treasuries were also weaker on Thursday. The yield on the two-year Treasury increased to 0.81% from 0.79% on Wednesday, while the 10-year Treasury yield rose to 1.87% from 1.83% and the yield on the 30-year Treasury bond climbed to 2.70% from 2.64%.
The 10-year muni to Treasury ratio was calculated at 87.6% on Thursday compared with 84.3% on Wednesday, while the 30-year muni to Treasury ratio stood at 95.8% versus 94.3%, according to MMD. On Thursday, April 14, the 10-year muni to Treasury ratio was at 91.0% while the 30-year muni to Treasury ratio stood at 98.7%.
"The good reception for negotiated sales [on Wednesday] encouraged muni sellers to sit on their hands and ignore the Treasury market drift. But late in [Wednesday's] session and early [on Thursday], sellers turned more aggressive," MMD Senior Market Analyst Randy Smolik wrote in a Thursday market comment. He said that a fair amount of sizeable number of customer bid wanted blocks had surfaced, "no doubt in reaction to the recent plunge in muni/Treasury ratios."
Primary Market
Municipal bond traders saw the last of the week's healthy new issue calendar hit the screens on Thursday.
In the competitive arena, the Florida State Board of Education sold $183.33 million of Series 2016B full faith and credit public education capital outlay refunding bonds.
Bank of America Merrill Lynch won the PECO bonds with a true interest cost of 2.63%. The issue was priced to yield from 0.73% with a 5% coupon in 2018 to 3.10% with a 3% coupon in 2037. The bonds are rated Aa1 by Moody's Investors Service and triple-A by Standard & Poor's and Fitch Ratings.
Since 2006, the BoE has sold almost $15 billion of debt. The most issuance occurred in 2010 when it offered $2.18 billion of bonds; it sold the least amount of debt in 2014 when it issued $787 million of bonds.
Raymond James priced the Lewisville Independent School District, Texas' $336.93 million of Series 2016A & B unlimited tax refunding bonds.
The $252.40 million of Series 2016A bonds were priced to yield from 0.79% with a 5% coupon in 2018 to 2.38% with a 3% coupon in 2028. The 2016 and 2017 maturities were offered as sealed bids.
The $84.54 million of Series 2016B bonds were priced to yield from 0.97% with a 2% coupon in 2019 to 1.98% with a 5% coupon in 2026; a 2028 term bond was prices as 5s to yield 2.16%. The 2016 and 2017 maturities were offered as sealed bids.
The Series 2016A bonds are backed by the Permanent School Fund guarantee program and rated triple-A by S&P and Fitch. The Series 206B bonds are non-PSF backed and rated AA-plus by S&P and Fitch.
JPMorgan Securities priced the Wisconsin Health and Educational Facilities Authority's $157.49 million of Series 2016 revenue bonds for the Medical College of Wisconsin, Inc. The issue was priced to yield from 0.67% with a 2% coupon in 2016 to 3.39% with a 3.25% coupon in 2036; a 2041 term bond was priced as 5s to yield 3.02% and a 2046 term was priced as 4s to yield 3.48%. The deal is rated A1 by Moody's and AA-minus by S&P.
Citigroup priced the New Brunswick, Middlesex County, N.J., Parking Authority's $116.32 million of Series 2016A city-guaranteed parking revenue refunding bonds. The issue was priced to yield from 1.53% with a 4% coupon in 2021 to 2.86% with a 5% coupon in 2036; a 2039 term was priced as 5s to yield 2.96%.
The deal is insured by Build America Mutual and rated AA by S&P which assigns the deal an underlying rating of A-plus.
Barclays Capital Markets priced the Trustees of Purdue University, Ind.'s $117.99 million of Series CC student fee bonds. The issue was priced to yield from 0.64% with a 3% coupon in 2017 to 2.44% with a 5% coupon in 2036. The deal is rated triple-A by Moody's and S&P.
BAML priced the Stafford County Economic Development Authority, Va.'s $109.55 million of Series 2016 hospital facilities revenue and refunding bonds for the Mary Washington Healthcare Obligated Group. The issue was priced to yield from 0.88% with a 3% coupon in 2017 to 3.54% with a 4% coupon in 2037. The deal is rated Baa1 by Moody's and triple-B-plus by Fitch.
Wells Fargo Securities received the written award on the Golden Empire Schools Financing Authority, Calif.'s $151.88 million of Series 2016 lease revenue refunding notes for Kern High School District projects. The notes were priced at par to yield 0.91% in 2017 and rated MIG-1 by Moody's and SP-1 by S&P.
Tax-Exempt Money Market Funds See Outflows
Tax-exempt money market funds experienced outflows of $2.73 billion, bringing total net assets to $221.60 billion in the week ended April 18, according to The Money Fund Report, a service of iMoneyNet.com. This followed an outflow of $2.34 billion to $224.32 billion in the previous week.
The average, seven-day simple yield for the 314 weekly reporting tax-exempt funds was unchanged from the previous week at 0.04%.
The total net assets of the 903 weekly reporting taxable money funds decreased $31.82 billion to $2.457 trillion in the week ended April 19, after an inflow of $1.11 billion to $2.489 trillion the week before.
The average, seven-day simple yield for the taxable money funds was unchanged at 0.11% from the prior week.
Overall, the combined total net assets of the 1,217 weekly reporting money funds decreased $34.55 billion to $2.679 trillion in the period ended April 19, which followed an outflow of $1.23 billion to $2.714 trillion.
