Top- rated municipal bonds ended stronger on Thursday, according to traders, with yields on some maturities sliding as much as seven basis points.
The yield on the 10-year benchmark muni general obligation fell four basis points to 1.59% from 1.63% on Wednesday, while the 30-year muni yield dropped seven basis points to 2.54% from 2.61%, according to the final read of Municipal Market Data's triple-A scale.
In the past week, muni yields have fallen substantially. Since Thursday, March 31, the yield on the 10-muni has dropped by 11 basis points from 1.70%; the 30-year muni yield is down by 15 basis points from 2.69%.
U.S. Treasuries also strengthened on Thursday. The yield on the two-year Treasury dropped to 0.70% from 0.74% on Wednesday, while the 10-year Treasury yield declined to 1.69% from 1.75% and the 30-year Treasury bond yield fell to 2.51% from 2.58%.
The 10-year muni to Treasury ratio was calculated at 94.3% on Thursday compared with 93.0% on Wednesday, while the 30-year muni to Treasury ratio stood at 101.2% versus 101.1%, according to MMD.
Primary Market
The last of the week's big deals hit the screens Thursday, with California and New York issuers dominating the new issue slate.
Wells Fargo Securities priced the Regents of the University of California's $813.12 million of general revenue bonds.
The $410.27 million Series AR bonds were priced and repriced to yield from 0.58% with a 3% coupon in 2017 to 3.10% with a 3% coupon and 2.54% with a 5% coupon in a split 2038 maturity; a 2041 maturity was priced as 5s to yield 2.59% and a 2046 term bond was priced as 5s to yield 2.64%. The $132.3 million of Series AT bonds were priced and repriced to yield 1.40% at par in 2046; the bonds have a mandatory tender date in 2021. Both tax-exempt series were offered to retail investors on Wednesday.
The $182.35 million of taxable Series AS bonds were priced at par to yield from about 25 basis points over the comparable Treasury security in 2018 to around 165 basis points over the comparable Treasury security in 2034, and about 105 basis points over the comparable Treasury security in 2039 and approximately 120 basis points over the comparable Treasury security in 46. The $88.2 million of taxable Series AU bonds were priced at par to yield about 77 basis points over the comparable Treasury security in a bullet 2021 maturity.
The issue is rated Aa2 by Moody's Investors Service and AA by Standard & Poor's and Fitch Ratings. The credit has a stable outlook from all three rating agencies.
Since 2006, the Regents have issued over $20 billion of debt, with the most issuance occurring in 2013 when $4.70 billion of bonds were sold. The least amount of debt was offered in 2008 when $571.8 million of bonds were sold.
Wells priced and repriced the Los Angeles Department of Water and Power's $628.52 million of Series 2016A water system revenue bonds. The deal was upsized from the originally expected $550 million. The issue was repriced to yield from 1.00% with a 4% coupon in 2021 to 2.49% with a 5% coupon in 2038; a 2040 maturity was priced at par to yield 2.60%, a 2041 maturity was priced as 5s to yield 2.55% and a 2046 term bond was priced as 5s to yield 2.61%. The bonds are rated Aa2 by Moody's, AA-plus by S&P and AA by Fitch.
Goldman Sachs priced and repriced the Dormitory of the State of New York's $389.71 million of Series 2016 Columbia University revenue bonds for institutions after a one-day retail order period.
The $50 million of Subseries 2016A-1 green bonds were repriced as 4s and 5s to yield 1.67% in a split 2026 maturity. The $130 million of Subseries 2016A-2 bonds were repriced as 5s to yield 1.35% in 2023, 1.48% in 2024, 1.91% in 2029, and 2.56% and 2.89% in a split 2046 maturity. The $210.28 million of Series 2016B bonds were repriced to yield from 0.57% with 3% and 5% coupons in a split 2017 maturity to 2.04% with a 5% coupon in 2031. The issue is rated triple-A by Moody's and S&P.
Morgan Stanley priced and repriced DASNY's $146.66 million of Series 2016A revenue bonds for Fordham University.
The issue was repriced to yield from 0.60% with a 3% coupon in 2017 to 2.64% with a 5% coupon in 2036; a 2038 maturity was priced at par to yield 2.25% and a 2041 maturity was priced as 5s to yield 2.80%. The bonds are rated A2 by Moody's and A by S&P.
Tax-Exempt Money Market Funds Post Outflows
Tax-exempt money market funds experienced outflows of $2.45 billion, bringing total net assets to $226.67 billion in the week ended April 4, according to The Money Fund Report, a service of iMoneyNet.com. This followed an outflow of $4.05 billion to $229.12 billion in the previous week.
The average, seven-day simple yield for the 353 weekly reporting tax-exempt funds increased to 0.04% from 0.02% the previous week.
The total net assets of the 942 weekly reporting taxable money funds decreased $61.57 billion to $2.487 trillion in the week ended April 5, after an outflow of $904.6 million to $2.548 trillion the week before.
The average, seven-day simple yield for the taxable money funds was unchanged at 0.11%.
Overall, the combined total net assets of the 1,295 weekly reporting money funds decreased $64.03 billion to $2.713 trillion in the period ended April 5, which followed an outflow of $4.95 million to $2.777 trillion.
