Top rated municipal bonds remained weaker at mid-session, traders said, with yields on some longer-dated maturities stronger by as much as five basis points.
The yield on the 10-year benchmark muni general obligation was three to five basis points stronger on Thursday from 1.59% on Wednesday, while the 30-year muni yield was stronger by three to five basis points from 2.54%, according to a read of the Municipal Market Data's triple-A scale.
U.S. Treasuries were also weaker. The yield on the two-year Treasury increased to 0.81% from 0.79% on Wednesday, while the 10-year Treasury yield rose to 1.86% from 1.83% and the yield on the 30-year Treasury bond gained to 2.70% from 2.64%.
On Wednesday, the 10-year muni to Treasury ratio was calculated at 84.3% compared with 89.2% on Tuesday, while the 30-year muni to Treasury ratio stood at 94.3% versus 97.5%, according to MMD.
"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 today, sellers have turned more aggressive," MMD Senior Market Analyst Randy Smolik wrote in a Thursday market comment. "A fair amount of sizeable customer bid wanted blocks have surfaced…no doubt in reaction to the recent plunge in muni/Treasury ratios and the Treasury market continuing to fade."
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 39,849 trades on Wednesday on volume of $13.02 billion.
Primary Market
Municipal bond traders are seeing 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%. Pricing information was not immediately available.
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.
Bank of America Merrill Lynch 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 3.59% 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.
Raymond James is expected to price the Lewisville Independent School District, Texas' unlimited tax refunding bonds. The issue, which is backed by the Permanent School Fund guarantee program is rated triple-A by S&P and Fitch.
Pipe Jaffray is set to price the Central Kitsap School District No. 401, Wash.'s $110 million of Series 2016 unlimited tax general obligation bonds. The deal is backed by the Washington State Credit Enhancement Program and is rated Aa2 by Moody's Investors Service and AA by S&P.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar decreased $736.8 million to $10.63 billion on Thursday. The total is comprised of $4.23 billion of competitive sales and $6.40 billion of negotiated deals.
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.
