After a frenzy-filled day in the primary on Wednesday, with the pricing of the Chicago Board of Education's $725 million deal that was originally scheduled for the previous week, the action will continue Thursday with a slew of large deals from issuers in Texas, Maryland and Georgia.
Munis were mostly steady on Thursday morning, although yields on some maturities were one basis point lower, according to traders.
Secondary Market
On Thursday morning, the yield on the 10-year benchmark muni general obligation was steady from 1.66% on Wednesday, while the 30-year muni yield was flat at 2.72%, according to a read of Municipal Market Data's triple-A scale.
Treasuries were mostly steady on Thursday morning. The yield on the two-year Treasury was down to 0.70% from 0.72% on Wednesday, while the 10-year Treasury yield was flat at 1.88% and the 30-year Treasury bond yield was unchanged at 2.71%.
The 10-year muni to Treasury ratio was calculated on Wednesday at 85.8% compared to 90.3% on Tuesday, while the 30-year muni to Treasury ratio stood at 99.6% versus 101.7%, according to MMD.
Primary Market
The size of the Chicago BOE deal bounced around. Originally planned as $875 million, at the pricing it was $675 million, but was then upsized to $725 million.
There was originally a taxable portion to the deal but that is now off the table.
Shortly after the market closed on Wednesday, Chicago Public Schools issued a statement. "Borrowing money was never a decision that we took lightly and though some wanted our efforts to fail, CPS needed to move forward in order to keep our doors open so we could educate our children," said Ron DeNard, CPS senior vice president, said in the release. "Along with the tough cuts announced yesterday and earlier this year, the sale of these bonds will produce sufficient proceeds to mitigate our cash flow challenges through the end of the fiscal year. CPS faces many financial difficulties ahead, but we are committed to working with Chicago Teachers Union on a long-term contract and the State to finally address the inequitable state funding for CPS that is driving the District's budget imbalance."
The statement also said CPS will make its Feb. 15 debt service payments and the just-sold bond will largely reimburse the operating fund for expenses the district has already paid.
The primary market will see its busiest day of the week.
Morgan Stanley is expected to price the Dallas Area Rapid Transit's Series 2016A senior lien sales tax revenue refunding bonds. The DART deal is rated Aa2 by Moody's Investors Service and AA-plus by Standard & Poor's.
Since 2007, DART has issued bonds on average once a year, selling about $4.32 billion, with the largest issuances in 2009 and 2010 when it offered $1 billion and $825 million, respectively. It did not issue any bonds in 2011, 2013 or 2015.
In the competitive arena, the Metropolitan Atlanta Rapid Transit Authority, Ga., will sell $247.73 million of refunding series 2016B sales tax revenue bonds, Third Indenture Series. The deal is rated Aa2 by Moody's.
MARTA last competitively sold comparable bonds on Nov. 5, 2015, when Wells Fargo Securities won $181.57 million of Series 2015B sales tax revenue bonds, Third Indenture Series with a TIC of 3.899%.
The Maryland University System is competitively selling two issues totaling $201.33 million. The deals consist of $140 million of Series 2016A auxiliary facility and tuition revenue bonds and $61.33 million of refunding Series 2016B auxiliary facility and tuition revenue bonds. Both sales are rated Aa2 by Moody's and AA-plus by S&P.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar rose $1.21 billion to $11.21 billion on Thursday. The total is comprised of $4.44 billion of competitive sales and $6.77 billion of negotiated deals.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 39,194 trades on Wednesday on volume of $8.189 billion.
Tax-Exempt Money Market Funds Post Outflows
Tax-exempt money market funds experienced outflows of $1.57 billion, bringing total net assets to $247.37 billion in the week ended Feb. 1, according to The Money Fund Report, a service of iMoneyNet.com. This followed an outflow of $6.06 billion to $248.94 billion in the previous week.
The average, seven-day simple yield for the 354 weekly reporting tax-exempt funds remained at 0.01% for the 144th straight week.
The total net assets of the 946 weekly reporting taxable money funds increased $8.55 billion to $2.523 trillion in the week ended Feb. 2, after an inflow of $22.13 billion to $2.514 trillion the prior week.
The average, seven-day simple yield for the taxable money funds increased to 0.09% after two consecutive weeks at 0.08%.
Overall, the combined total net assets of the 1,300 weekly reporting money funds rose $6.98 billion to $2.770 trillion in the period ended Feb. 2, which followed an inflow of $16.06 billion to $2.763 trillion in the prior week.
Yvette Shields contributed to this report
