Top-rated municipal bonds remained stronger at mid-session, traders said, as yields on some maturities were as much as five basis points lower. Treasuries rose as equities fell on worries about China's economy and the drop in oil prices.
Meanwhile, traders were going through their books on Friday and placing the week's new sales into their inventory ahead of the long holiday weekend.
Secondary Market
The yield on the 10-year benchmark muni general obligation was down three to five basis points from 1.79% on Thursday, while the 30-year muni yield was off two to four basis points from 2.74%, according to a read of MMD's triple-A scale.
Treasuries were higher and stock prices were sharply lower as investor fears grew over economic uncertainty in China and falling oil prices. The Shanghai Composite Index fell 3.5% after data showed China bank loans were lower than expected last month. U.S. oil prices dropped on weak consumer and manufacturing economic reports.
The yield on the two-year Treasury dropped to 0.83% from 0.89% on Thursday, while the 10-year Treasury yield fell to 2.02% from 2.09% and the 30-year Treasury bond yield decreased to 2.81% from 2.89%.
The Dow Jones Industrial Average fell almost 500 points, the Nasdaq Composite Index decreased by around 175 and the S&P 500 Index was off by over 50 points. The price of oil fell under $30 to about $29.75 a barrel.
The 10-year muni to Treasury ratio was calculated on Thursday at 85.2% compared with 86.2% on Wednesday, while the 30-year muni to Treasury ratio stood at 94.7% versus 95.6%, according to MMD.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 38,319 trades on Thursday on volume of $9.17 billion.
Primary Market
The bond markets will be closed on Monday for the Rev. Martin Luther King, Jr. Day, and, consequently, supply will be lower than this week.
Next week's volume is estimated by Ipreo at $5.46 billion, consisting of $3.13 billion of negotiated deals and $2.33 billion of competitive sales.
There were lots of deals hitting the screens this week, topped by sales from issuers in Illinois.
Citigroup priced Chicago's $500 million of Series 2015C general obligation refunding bonds. The issue was rated triple-B-plus by Standard & Poor's and Fitch Ratings and A-minus by Kroll Bond Rating Agency.
Illinois competitively sold $480 million of Series of January 2016 unlimited tax GOs with a true interest cost of 3.9989% to Bank of America Merrill Lynch. This issue was rated Baa1 by Moody's Investors Service, A-minus by S&P and triple-B-plus by Fitch except for the 2034 and 2037-2039 maturities, which were insured by AGM and rated A2 by Moody's and AA by S&P.
The Illinois Regional Transportation Authority competitively sold $100 million of Series 2016A GOs. JPMorgan won the issue with a TIC of 3.51%. The bonds were rated Aa3 by Moody's and AA by S&P and Fitch.
JPMorgan priced the Illinois Housing Development Authority's $88.7 million of Series 2016A taxable homeowner mortgage revenue bonds. The bonds were rated Aa3 by Moody's and AA by S&P.
The Trinity Health Credit Group came to market with a $552.81 million composite bond offering from four different issuers. BAML priced all four series which consisted of offerings from the Michigan Finance Authority, the Connecticut Health and Educational Facilities Authority, Montgomery County, Md., and the Idaho Health Facilities Authority. The issues were rated Aa3 by Moody's, AA-minus by S&P and AA by Fitch.
Morgan Stanley priced the California Health Facilities Financing Authority's $475.45 million of Series 2016A revenue bonds for Sutter Health. The bonds were rated Aa3 by Moody's and AA-minus by S&P and Fitch.
Morgan Stanley also priced the Build NYC Resource Corp.'s $139.05 million of Series 2016 tax-exempt refunding bonds for the New York Law School project. The bonds were rated Baa3 by Moody's and triple-B by S&P.
Goldman, Sachs priced the New Jersey Turnpike Authority's $150.93 million of Series 2016A turnpike revenue bonds. The bonds were rated A3 by Moody's, A-plus by S&P and A by Fitch.
BAML priced the Delaware Transportation Authority's $181.48 million of Series 2016 transportation system revenue bonds. The bonds were rated Aa2 by Moody's and AA-plus by S&P.
BAML also priced the Indiana Finance Authority's $285.7 million of Series 2016A and 2016B health system revenue bonds for the Franciscan Alliance Obligated Group. The issue was rated Aa3 by Moody's and AA by Fitch.
Wells Fargo Securities priced Montgomery County, Texas's $111.84 million of Series 2016 unlimited tax road bonds and limited tax refunding bonds. The issue was rated Aa1 by Moody's and AA-plus by S&P.
In the competitive arena, Seattle, Wash., competitively sold $123.18 million of Series 2016B municipal light and power refunding revenue bonds. Citigroup won the issue with a TIC of 2.07%. Seattle also competitively sold $32 million of Series 2016A taxable new clean renewable energy direct payment municipal light and power revenue bonds. Wells Fargo Securities won the bonds with a TIC of 4.05%. Both issues were rated Aa2 by Moody's and AA by S&P.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar fell $362.3 million to $8.54 billion on Friday. The total is comprised of $4.04 billion competitive sales and $4.50 billion of negotiated deals.
Municipal Bond Funds Report Inflows
Municipal bond funds reported inflows for the 15th straight week, according to Lipper data released on Thursday.
Weekly reporting funds said they had $994.811 million of inflows in the week ended Jan. 13, after inflows of $992.749 million in the previous week, Lipper said.
The four-week moving average remained positive at $1.024 billion after being in the green at $851.299 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 experienced inflows, gaining $667.366 million in the latest week, on top of inflows of $496.862 million in the previous week. Intermediate-term funds had inflows of $251.084 million after inflows of $316.115 million in the prior week.
National funds saw inflows of $920.013 million after inflows of $924.675 million in the prior week. High-yield muni funds reported inflows of $399.087 million in the latest reporting week, after an inflow of $307.597 million the previous week.
Exchange traded funds saw inflows of $165.154 million, after inflows of $257.265 million in the previous week.
In the week ended Jan. 6, long-term, long-term municipal bond funds saw inflows, according to the Investment Company Institute. Muni funds saw $1.382 billion of inflows after $2.249 billion of inflows in the previous week, ICI reported.
The Week's Most Actively Quoted Issues
New York City, Atlanta and the state of California were among some of the most actively quoted names in the week ended Jan. 15, according to data released by Markit.
On the bid side, the New York City Municipal Water Finance Authority revenue 5.44s 8s of 2043 were quoted by 11 unique dealers. On the ask side, the Atlanta water and waste water revenue 5s of 2040 were quoted by 17 unique dealers. And among two-sided quotes, the state of California revenue 7.55s of 2039 were quoted by 22 dealers.
The Week's Most Actively Traded Issues
Some of the most actively traded issues by type in the week ended Jan. 15 were in Illinois, South Carolina and Michigan, according to
In the GO bond sector, the Chicago 5s of 2038 traded 70 times. In the revenue bond sector, the South Carolina Public Service Authority 3.75s of 2048 traded 64 times. And in the taxable bond sector, the Anchor Bay School District 2.12s of 2020 traded 13 times, Markit said.
