Top-shelf municipal bonds were steady at mid-session, traders said, ahead of next week's new issue calendar.
Ipreo estimates next week supply at $5.81 billion, down from the $9.17 billion sold this week. The calendar is comprised of $3.10 billion of negotiated deals and $2.71 billion of competitive sales.
Secondary Market
Bond traders were digesting another strong jobs report ahead of next week's meeting of the Federal Reserve.
The Labor Department reported on Friday that non-farm payrolls rose 235,000 in February, far above the 190,000 gain predicted by economists polled by IFR Markets. The data cements the case for those who believe the Federal Open Market Committee will raise interest rates at its meeting next week.
The 10-year benchmark muni general obligation yield was unchanged from 2.47% on Thursday, while the yield on the 30-year GO was steady from 3.24%, according to a read of Municipal Market Data's triple-A scale.
U.S. Treasuries were weaker. The yield on the two-year Treasury rose to 1.37% from 1.36% on Thursday, while the 10-year Treasury yield gained to 2.60% from 2.59%, and the yield on the 30-year Treasury bond increased to 3.19% from 3.18%.
On Thursday, the 10-year muni to Treasury ratio was calculated at 95.1% compared to 96.4% on Wednesday, while the 30-year muni to Treasury ratio stood at 101.9%, versus 102.7%, according to MMD.
MSRB: Previous Session's Activity
The Municipal Securities Rulemaking Board reported 45,827 trades on Thursday on volume of $14.57 billion.
Week's Most Actively Traded Issues
Some of the most actively traded issues by type in the week ended March 10 were from California and New York, according to
In the GO bond sector, the California 4s of 2038 were traded 55 times. In the revenue bond sector, the New York City Transitional Finance Authority 3.5s of 2034 were traded 30 times. And in the taxable bond sector, the California 7.55s of 2039 were traded 18 times.
Week's Most Actively Quoted Issues
Alaska, New York and Florida names were among the most actively quoted bonds in the week ended March 10, according to Markit.
On the bid side, the Alaska Sport Fishing revenue 5s of 2025 were quoted by 299 unique dealers. On the ask side, the New York City Municipal Water Finance Authority 4s of 2039 were quoted by 256 unique dealers. And among two-sided quotes, the Florida Hurricane Catastrophe Fund Financing Corp. taxable 2.995s of 2020 were quoted by 25 unique dealers.
Week's Primary
The market saw lots of new issuance hit the screens this week, topped by the biggest sale of 2017 as Citigroup priced the state of California's $2.79 billion of various purpose general obligation bonds in a deal that was upsized from $2.45 billion.
The deal is rated Aa3 by Moody's Investors Service and AA-minus by S&P Global Ratings and Fitch Ratings.
Proceeds of the sale will be used to pay for a variety of projects, including safe drinking water, housing and educational facilities.
New borrowing accounted for $513.2 million, while the refunding of existing bonds at lower interest rates totaled $2.279 billion, according to State Treasurer John Chiang. The refunding created about $295 million in present value savings to taxpayers and $406 million in debt service nominal savings over the remaining life of the bonds.
Chiang said the sale was a success, given uncertainty over interest rate hikes and their impact on the bond market.
"This demonstrates that despite the recent run-up in interest rates, we still can diligently work to save taxpayer money and build infrastructure that California badly needs," Chiang said in a press release.
Citi also priced the city of Los Angeles Department of Water and Power's $344.575 million of Series 2017B power system revenue bonds. The deal is rated Aa2 by Moody's and AA-minus by S&P and Fitch.
JPMorgan Securities priced the New York City Transitional Finance Authority's $800 million of future tax secured subordinate refunding bonds in a deal that consisted of $761.12 million of Fiscal 2017 Series C future tax secured tax-exempt subordinated bonds and $38.88 million of Fiscal 2017 Series D future tax secured tax-exempt subordinated bonds. The deal is rated Aa1 by Moody's and triple-A by S&P and Fitch.
The TFA said it received $452 million of retail orders for the bonds during a two-day retail order period, of which approximately $430 million was usable. During the institutional order period, the TFA said it received about $1.03 billion of priority orders, representing 3.1 times the bonds offered for sale to institutions. Given the strong demand, yields were reduced by one to four basis points in several maturities, according to the TFA.
Jefferies priced the New York Metropolitan Transportation Authority's $325.56 million of transportation revenue green bonds in a deal that consisted of $188.92 million of Subseries 2017A-1 climate bond certified transportation revenue green bonds and $136.64 million of Subseries 2017A-2 climate bond certified transportation revenue refunding green bonds. The deal is rated A1 by Moody's, AA-minus by S&P, A by Fitch and AA-plus by Kroll Bond Rating Agency.
JPMorgan priced the New York State Housing Finance Agency's $155.55 million of climate bond certified green bonds in a deal that consisted of $56.29 million of Series 2017D affordable housing revenue green bonds and $99.27 million of Series 2017E affordable housing revenue green bonds. The deal is rated Aa2 by Moody's.
Goldman Sachs priced the New Jersey Educational Facilities Authority's $338.44 million of Series 2017B revenue refunding bonds for Princeton University. The deal is rated triple-A by Moody's and S&P.
Bank of America Merrill Lynch priced the West Virginia Finance Authority's $184.12 million of Series 2017A hospital revenue improvement bonds for the West Virginia University Health System Obligated Group. The deal is rated A2 by Moody's and A by S&P.
RBC Capital Markets priced the Coast Community College District in Orange County, Calif.'s Election of 2012 $280 million of Series 2017D tax-exempt general obligation bonds and $20 million of Series 2017E taxable GOs. The deal is rated Aa1 by Moody's and AA-plus by S&P.
RBC also priced the Texas Public Finance Authority's $141.52 million of Series 2017A GO refunding bonds. The deal is rated triple-A by Moody's and S&P.
Wells Fargo Securities priced the University of Pittsburgh's $104.4 million of Series 2017B taxable university refunding bonds. The deal is rated Aa1 by Moody's and AA-plus by S&P.
In the competitive arena, Maryland sold almost $1.15 billion of tax-exempt and taxable general obligation bonds in three separate sales. BAML won the $575 million of First Series A tax-exempt GOs, state and local facilities loan of 2017, with a true interest cost of 2.83%.BAML also won the $470.89 million of First Series C tax-exempt refunding GOs, state and local facilities loan of 2017, with a TIC of 1.72%. Wells Fargo Securities won the $100 million of First Series B taxable GOs, state and local facilities loan of 2017, with a TIC of 2.03%. All three deals are rated triple-A by Moody's, S&P and Fitch.
Wisconsin sold $340.39 million of Series 2017 unlimited tax GOs. Citi won the bonds with a true interest cost of 3.44%. The deal is rated Aa2 by Moody's and AA by S&P and Fitch.
Boston sold $150 million of Series 2017A unlimited tax GOs. Citi won the deal with a TIC of 2.67%. The deal is rated triple-A by Moody's and S&P.
Sullivan County, Tenn., competitively sold $135.74 million of Series 2017 GOs. Wells Fargo Securities won the deal with a TIC of 3.07%. The deal is rated Aa2 by Moody's.
The Springdale School District No. 50, Ark., competitively sold $128.8 million of limited tax GO refunding bonds on Tuesday. Morgan Stanley won the bonds with a TIC of 3.65%. The deal is rated Aa2 by Moody's.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar increased $1.50 billion to $10.96 billion on Friday. The total is comprised of $4.77 billion of competitive sales and $6.19 billion of negotiated deals.
Lipper: Muni Bond Funds Report Outflows
Investors in municipal bond funds continued to withdraw cash in the latest week, according to Lipper data released late Thursday. The weekly reporters saw $73.145 million of outflows in the week ended March 8, after outflows of $346.225 million in the previous week.
The four-week moving average remained in the green at positive $52.510 million, after being positive at $146.846 million in the previous week. A moving average is an analytical tool used to smooth out price changes by filtering out fluctuations.
Long-term muni bond funds also had outflows, losing $25.122 million in the latest week after falling $228.545 million in the previous week. Intermediate-term funds had outflows of $1.386 million after outflows of $41.652 million in the prior week.
National funds had inflows of $669,000 after outflows of $239.790 million in the previous week. High-yield muni funds reported inflows of $17.823 million in the latest reporting week, after inflows of $48.366 million the previous week.
Exchange traded funds saw inflows of $11.944 million, after inflows of $105.083 million in the previous week.
