Prices of top quality municipal bonds were steady to stronger at mid-session, according to traders, as the Massachusetts Water Resources Authority’s upsized $750 million deal was priced for institutions.
Secondary Market
The yield on the 10-year benchmark muni general obligation was steady from 1.62% on Wednesday, while the 30-year muni yield weakened by as much as two basis points from 2.56%, according to a read of Municipal Market Data's triple-A scale.
U.S. Treasuries were weaker on Thursday. The yield on the two-year Treasury rose to 0.76% from 0.75% on Tuesday, while the 10-year Treasury yield increased to 1.78% from 1.76% and the yield on the 30-year Treasury bond gained to 2.60% from 2.58%.
The 10-year muni to Treasury ratio was calculated at 92.0% on Wednesday compared with 91.0% on Tuesday, while the 30-year muni to Treasury ratio stood at 99.3% versus 98.6%, according to MMD.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 41,255 trades on Wednesday on volume of $13.89 billion.
Primary Market
Citigroup priced the MWRA's $750.52 million of general revenue bonds for institutions after holding a one-day retail order period on Wednesday. The deal was originally sized at $514.62 million.
The $66.05 million of Series 2016B general revenue bonds were priced for institutions as 3s to yield 0.65% in 2018 and 0.80% in 2019 and as 4s to yield 0.90% in 2020; and from 1.39% with a 4% coupon in 2023 to 2.46% with a 5% coupon in 2036; a 2040 term bond was priced as 5s to yield 2.62%. A 2017 maturity was offered as a sealed bid.
The $684.51 million of Series 2016C general revenue refunding green bonds were priced for institutions to yield from 1.25% with a 4% coupon in 2022 to 2.76% with a 4% coupon in 2036; a split 2040 maturity was priced as 4s to yield 2.92% and as 5s to yield 2.62%.
For retail investors, the $66.05 million of Series 2016B general revenue bonds were priced for retail as 3s to yield 0.69% in 2018, 0.80% in 2019, 0.93% in 2020; and from 1.39% with a 4% coupon in 2023 to 2.47% with a 5% coupon in 2036; a 2040 term bond was priced as 5s to yield 2.63%. A 2017 maturity was offered as a sealed bid.
The $448.57 million of Series 2016C general revenue refunding green bonds were priced for retail to yield from 1.25% with a 4% coupon in 2022 to 1.77% with a 4% coupon in 2026, as 5s to yield 2.18% in 2031, as 4s to yield 2.77% in 2036 and as 4s to yield 2.93% in a split half of a 2040 maturity. There were no retail order taken in the 2021, 2027-2030, 2032-2035 maturities or in half of the 2040 split maturity. A 2017 maturity was offered as a sealed bid.
The deal is rated Aa1 by Moody's Investors Service and AA-plus by Standard and Poor's and Fitch Ratings. All three rating agencies have a stable outlook on the credit.
Wells Fargo Securities set to price the Kern County, Calif., Golden Empire School Financing Authority’s $150 million of lease revenue refunding notes, which have a mandatory tender in 2017. The notes are rated MIG1 by Moody’s and SP1 by S&P.
RBC Capital Market is expected to price the Tennessee Housing Development Agency’s $125 million of residential finance program bonds, Issue 2016-1A AMT and Issue 2016-1b non-AMT. The deal is rated Aa1 by Moody’s and AA-plus by S&P.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar fell $1.36 billion to $10.00 billion on Thursday. The total is comprised of $4.17 billion of competitive sales and $5.83 billion of negotiated deals.
Tax-Exempt Money Market Funds Post Outflows
Tax-exempt money market funds experienced outflows of $2.34 billion, bringing total net assets to $224.32 billion in the week ended April 11, according to The Money Fund Report, a service of iMoneyNet.com. This followed an outflow of $2.45 billion to $226.67 billion in the previous week.
The average, seven-day simple yield for the 315 weekly reporting tax-exempt funds was unchanged at 0.04% from the previous week.
The total net assets of the 943 weekly reporting taxable money funds increased $1.11 billion to $2.489 trillion in the week ended April 12, after an outflow of $61.57 billion to $2.487 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 1,258 weekly reporting money funds decreased $1.23 billion to $2.714 trillion in the period ended April 12, which followed an outflow of $64.03 billion to $2.715 trillion.
