Top-rated municipal bonds were stronger at mid-session, according to traders, with yields on some maturities weakening by as much as six basis points.
The yield on the 10-year benchmark muni general obligation was two to four basis points weaker from 1.63% on Wednesday, while the 30-year muni yield was four to six basis points weaker from 2.61%, according to a read of Municipal Market Data's triple-A scale.
Since last Thursday, the yields on the 10-muni has fallen by 12 basis points while the 30-year muni yield is down by 11 basis points.
U.S. Treasuries were stronger on Thursday. The yield on the two-year Treasury dropped to 0.70% from 0.74% on Wednesday, while the 10-year Treasury yield declined to 1.70% from 1.75% and the 30-year Treasury bond yield fell to 2.53% from 2.58%.
The 10-year muni to Treasury ratio was calculated on Wednesday at 93.0% compared with 94.5% on Tuesday, while the 30-year muni to Treasury ratio stood at 101.1% versus 102.4%, according to MMD.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 38,541 trades on Wednesday on volume of $11.97 billion.
Primary Market
The municipal bond market is seeing the last of the week’s big deals hit the screens, with California and New York issuers dominating the new issue slate.
Wells Fargo Securities priced the Regents of the University of California’s $545.34 million of general revenue bonds for institutions after a one-day retail order period.
The $413.04 million Series AR bonds were priced to yield from 0.58% with a 3% coupon in 2017 to 3.125% at par and 2.60% with a 5% coupon in a 2038 split maturity; a 2041 maturity was priced as 5s to yield 2.69% and a 2046 term bond was priced as 5s to yield 2.74%. The $132.3 million of Series AT bonds were priced at par to yield 1.50% in 2046; the bonds have a mandatory tender date in 2046. Pricing information on the taxable Series AS and AU bonds was not available.
The issue is rated Aa2 by Moody’s Investors Service and AA by Standard & Poor’s and Fitch Ratings. The credit has a stable outlook from all three rating agencies.
Since 2006, the Regents have issued over $20 billion of debt, with the most issuance occurring in 2013 when $4.70 billion of bonds were sold. The least amount of debt was offered in 2008 when $571.8 million of bonds were sold.
Wells also priced the Los Angeles Department of Water and Power’s $550 million of Series 2016A water system revenue bonds. The issue was priced to yield from 1.04% with a 4% coupon in 2021 to 2.59% with a 5% coupon in 2038; a 2040 maturity was priced at par to yield 2.60%, a 2041 maturity was priced as 5s to yield 2.66% and a 2046 term bond was priced as 5s to yield 2.71%. The bonds are rated Aa2 by Moody’s, AA-plus by S&P and AA by Fitch.
Goldman Sachs priced the Dormitory of the State of New York’s $390.28 million of Series 2016 Columbia University revenue bonds for institutions after a one-day retail order period.
The $50 million of Subseries 2016A-1 green bonds were priced as 4s and 5s to yield 1.72% in a split 2026 maturity. The $130 million of Subseries 2016A-2 bonds were priced as 5s to yield 1.32% in 2023, 1.51% in 2024, 1.96% in 2029, and 2.66% and 2.96% in a split 2046 maturity. The $212.28 million of Series 2016B bonds were priced to yield from 0.60% with 3% and 5% coupons in a split 2017 maturity to 2.09% with a 5% coupon in 2031. The issue is rated triple-A by Moody’s and S&P.
Morgan Stanley priced DASNY’s $148.83 million of Series 2016A revenue bonds for Fordham University.
The issue was priced to yield from 0.77% with a 3% coupon in 2018 to 2.79% with a 5% coupon in 2036; a 2038 maturity was priced at par to yield 2.50% and a 2041 maturity was priced as 5s to yield 2.95%. A 2017 maturity was offered as a sealed bid. The bonds are rated A2 by Moody’s and A by S&P.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar fell $460.6 million to $8.97 billion on Thursday. The total is comprised of $2.85 billion of competitive sales and $6.12 billion of negotiated deals.
Tax-Exempt Money Market Funds Post Outflows
Tax-exempt money market funds experienced outflows of $2.45 billion, bringing total net assets to $226.67 billion in the week ended April 4, according to The Money Fund Report, a service of iMoneyNet.com. This followed an outflow of $4.05 billion to $229.12 billion in the previous week.
The average, seven-day simple yield for the 353 weekly reporting tax-exempt funds increased to 0.04%, from 0.02% the previous week.
The total net assets of the 942 weekly reporting taxable money funds decreased $61.57 billion to $2.487 trillion in the week ended April 5, after an outflow of $904.6 million to $2.548 trillion in the prior week.
The average, seven-day simple yield for the taxable money funds was unchanged at 0.11%.
Overall, the combined total net assets of the 1,295 weekly reporting money funds decreased $64.03 billion to $2.713 trillion in the period ended April 5, which followed an outflow of $4.95 million to $2.777 trillion.
