Prices of top quality municipal bonds closed unchanged on Thursday, according to traders, as the Massachusetts Water Resources Authority increased the size of its sale for the institutional pricing.
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.
"We got approval from the board of directors for the $100 million new money and $450 million refunding in February," said Thomas Durkin, director of finance and chief financial officer of the MWRA. "We are looking at really low rates, and yesterday the board approved increasing the refunding authorization by $235 million to $685 million, for a new total of $785 million. Although the actual deal size is somewhat smaller. We put the green bond moniker on it and it seems to be working out well, but we have always considered ourselves a green bond issuer."
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.
RBC Capital Markets priced the Tennessee Housing Development Agency's $125 million of residential finance program bonds, Issue 2016-1A AMT and Issue 2016-1b non-AMT.
The $24.060 million of AMT bonds were priced as a bullet maturity in 2047 to yield 2.030% with a 3.50% coupon.
The $100.940 million of non-AMT bonds were priced at par to yield from 0.625% and 0.75% in a split 2017 maturity to 2.95% in a split 2031 maturity. Term bonds in 2036 and 2038 were also priced at par to yield 3.25% and 3.375%, respectively. A term bond in 2047 was priced at 107.618% with a 3.5% coupon and an approximate yield of 1.880%. The deal is rated Aa1 by Moody's and AA-plus by S&P.
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 was also unchanged from 2.56% on Wednesday, according to a final 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 91.0% on Thursday compared with 92.0% on Wednesday, while the 30-year muni to Treasury ratio stood at 98.7% versus 99.3%, according to MMD.
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.
