Prices of top-rated municipal bonds were steady at mid-session, as traders looked ahead to next week's $7.9 billion new issue slate after seeing an action-packed three days following Columbus Day.
There are $5 billion of negotiated deals slated for next week along with $2.9 billion of competitive sales, according to data compiled by Ipreo.
Secondary Trading
The yield on the 10-year benchmark muni general obligation was steady from 2.02% on Thursday, while the yield on the 30-year GO was flat from 3.07%, according to a read of Municipal Market Data's triple-A scale.
Treasury prices were mixed on Friday, with the yield on the two-year Treasury rising to 0.61% from 0.59% on Thursday, while the 10-year yield was flat from 2.02% and the 30-year yield decreased to 2.86% from 2.87%.
The 10-year muni to Treasury ratio was calculated on Thursday at 99.9% versus 101.6% on Wednesday, while the 30-year muni to Treasury ratio stood at 106.9% compared to 107.9%, according to MMD.
The Past Week’s Primary Market
Billions of dollars of negotiated and competitive bond sales were packed into the holiday-shortened week, topped by a $1 billion restructuring bond deal from New York's Long Island Power Authority, through its conduit issuer, the Utility Debt Securitization Authority. The offering was priced by Bank of America Merrill Lynch.
The bonds were rated triple-A by Moody's Investors Service, Standard & Poor's and Fitch Ratings. The sale of the top-rated UDSA bonds refinanced triple-B rated LIPA bonds.
The transaction was well received by investors, LIPA spokesman Sid Nathan told The Bond Buyer, with the deal attracting over $250 million of retail orders on Wednesday and $1.5 billion of institutional orders on Thursday.
Nathan said the strong market reception let the UDSA cut the cost of its financing by about five basis points between Wednesday morning and Thursday afternoon, saving customers an additional $5 million.
The old LIPA bonds had an average cost of 5.54%, while the new UDSA bonds have an average cost of 3.40%.
“The refinancing saves our customers $128 million (net present value), including $102 million during the three-year rate plan of 2016-2018 (the rate plan goal is $172 million from 2016-2018)," Nathan said. “The UDSA plans to refinance an additional $1.5 billion of bonds for additional savings over the next three years, including a financing in March 2016 and September 2016."
BAML also priced the state of Hawaii's $747.69 million of Series 2015 general obligation bonds, Series ET, EU, EV, EW, EX, EY, EZ and FA. The issue, which included a green bond component, was rated Aa2 by Moody's and AA by S&P and Fitch.
Ramirez & Co. priced and repriced Chicago's $419.36 million of second lien wastewater transmission tax-exempt revenue refunding and taxable revenue bonds. Yields at the repricing were cut by 10 to 13 basis points. A source told The Bond Buyer the deal had over $2 billion in orders and that the issue was from six to 15 times oversubscribed, with the shorter and longer maturities most in demand.
The Chicago bonds were rated A by S&P, AA by Fitch and AA-minus by Kroll Bond Rating Agency.
In the competitive arena, the Washington Suburban Sanitary District, Md., sold $390 million of consolidated public improvement bonds of 2015. BAML won the bonds with a true interest cost of 3.43%. The deal was rated triple-A by Moody's S&P and Fitch.
Also, the state of Nevada sold $344.88 million of GOs in five separate sales, the largest of which was a $256.3 million offering of Series 2015D limited tax GO capital improvement and refunding bonds which were won by Citigroup with a TIC of 2.43%. The bonds were rated Aa2 by Moody's, AA by S&P and AA-plus by Fitch.
Piper Jaffray priced the Texas Public Finance Authority's $369.8 million of Series 2015C taxable GO and refunding bonds. The issue was rated triple-A by Moody's, S&P and Fitch.
JPMorgan Securities priced the Pennsylvania Turnpike Commission's $192.22 million of Series 2015B turnpike subordinate revenue bonds. The bonds were rated A3 by Moody's and A-minus by S&P and Fitch.
William Blair & Co. priced the Irving Independent School District of Dallas County, Texas' $139.3 million of Series 2015A unlimited tax refunding bonds. The issue was backed by the Permanent School Fund guarantee program and rated triple-A by Moody's and S&P.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 37,738 trades on Thursday on volume of $8.57 billion.
The Week's Most Actively Quoted Issues
New York, New Jersey and Puerto Rico were some of the most actively quoted names in the week ended Oct. 16 according to data released by Markit.
On the bid side, the Port Authority of New York & New Jersey taxable 4.81s of 2065 were quoted by 13 unique dealers. On the ask side, the Port Authority of New York & New Jersey revenue 5s of 2035 were quoted by 14 dealers. And among two-sided quotes, Puerto Rico commonwealth GO 8s of 2035 were quoted by 11 dealers, Markit said.
The Week's Most Actively Traded Issues
Some of the most actively traded issues in the week ended Oct. 16 were in New York, New Jersey and Puerto Rico, according to Markit.
In the revenue bond sector, the Port Authority of New York & New Jersey 4s of 2045 were traded 81 times. In the GO bond sector, the Puerto Rico commonwealth GO 8s of 2035 were traded 29 times. And in the taxable bond sector, the Port Authority of New York & New Jersey 4.81s of 2065 were traded 25 times, Markit said.
Municipal Bond Funds See Inflows
Municipal bond funds reported inflows for the second week in a row, according to Lipper data released on Thursday.
Weekly reporting funds experienced $520.807 million of inflows in the week ended Oct. 14, after inflows of $714.012 million in the previous week, Lipper said.
The latest inflow brings to 21 out of 42 weeks this year that the funds have seen cash flowing in. Inflows for the year to date remain in the green, totaling over $2.5 billion.
The four-week moving average remained positive at $303.404 million after being in the green at $70.434 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 experienced inflows, gaining $400.314 million in the latest week, on top of inflows of $685.022 million in the previous week. Intermediate-term funds had inflows of $47.494 million after inflows of $57.063 million in the prior week.
High-yield muni funds reported inflows of $206.815 million in the latest reporting week, after an inflow of $270.816 million the previous week.
Exchange traded funds saw inflows of $38.537 million, after inflows of $185.961 million in the previous week.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar rose $734 million to $11.37 billion on Friday. The total is comprised of $3.64 billion competitive sales and $7.72 billion of negotiated deals.
