Top-rated municipal bonds were stronger in early Friday activity, according to traders, with yields on most maturities falling by as much as two basis points. Treasuries also strengthened after the release of weaker-than-expected economic data.
Secondary Market
The Labor Department reported the producer price index for July dropped 0.4%; economists surveyed by IFR Markets had expected a 0.1% rise. The Commerce Department reported that July retail sales were unchanged; economists polled by IFR Markets had expected a gain of 0.4%.
The yield on the 10-year benchmark muni general obligation fell by as much as two basis points from 1.43% on Thursday, while the yield on the 30-year muni dropped as much as two basis points from 2.16%, according to a read of Municipal Market Data's triple-A scale.
The yield on the two-year Treasury fell to 0.69% from 0.75% on Thursday, the 10-year Treasury yield dropped to 1.49% from 1.57% and the yield on the 30-year Treasury bond decreased to 2.22% from 2.28%.
On Thursday, the 10-year muni to Treasury ratio was calculated at 90.9% compared to 94.0% on Wednesday, while the 30-year muni to Treasury ratio stood at 94.5% versus 96.4%, according to MMD.
MSRB: Previous Session's Activity
The Municipal Securities Rulemaking Board reported 35,536 trades on Thursday on volume of $13.95 billion.
Week's Most Actively Traded Issues
Some of the most actively traded issues by type in the week ended Aug. 12 were from California and Missouri issuers, according to
In the GO bond sector, the Oakland USD, Calif., 3s of 2041 were traded 59 times. In the revenue bond sector, the University of California Medical Center 3s of 2042 were traded 79 times. And in the taxable bond sector, the Missouri HEFA 3.09s of 2051 were traded 66 times.
Week's Most Actively Quoted Issues
California and Illinois issues were among the most actively quoted names in the week ended Aug. 12, according to Markit.
On the bid side, the California taxable 7.6s of 2040 were quoted by 12 unique dealers. On the ask side, the California taxable 7.55s of 2039 were quoted by 13 unique dealers. And among two-sided quotes, the Illinois taxable 5.1s of 2033 were quoted by nine unique dealers.
Primary Market
The week's new issue market was chock-a-block with big-ticket names.
Bank of America Merrill Lynch won Pennsylvania's $1.21 billion of general obligation bonds with a true interest cost of 2.75%. The GOs bonds are rated Aa3 by Moody's Investors Service and AA-minus by S&P Global Ratings and Fitch Ratings, with the exception of the 2033 maturity, which is insured by Assured Guaranty.
Also in the competitive arena, the Louisville/Jefferson County Metropolitan Sewer District sold $150 million of sewer and drainage system revenue bonds, which were won by Wells Fargo with a TIC of 3.18%. The district also sold two sales totaling $102.03 million. Morgan Stanley won the $71.16 million of Series 2016C sewer and drainage system revenue refunding bonds with a TIC of 1.11%. Hutchinson Shockey won the $30.88 million of Series 2016B sewer and drainage system revenue refunding bonds with a TIC of 2.09%. The deals are rated Aa3 by Moody's and AA by S&P.
Citigroup won the Florida Board of Education's $198.44 million of Series 2016E public education capital outlay bonds with a TIC of 2.49%. The deal is rated Aa1 by Moody's and triple-A by S&P and Fitch.
BAML won Milwaukee, Wis.' $100 million sewerage system revenue bonds with a TIC of 2.37%. The deal is rated AA-minus by S&P and AA by Fitch.
In the negotiated sector, Barclays Capital Markets priced the Regents of the University of California Medical Center's $1.05 billion of tax-exempt and taxable bonds, consisting of $873 million of Series 2016L tax-exempt pooled revenue bonds and $173.36 million of Series 2016M taxables. The deal is rated Aa3 by Moody's and AA-minus by S&P and Fitch. The credit carries stable outlooks from all three rating agencies.
Citigroup priced the Utility Debt Securitization of New York's $469.46 million of Series 2016B restructuring bonds. The deal is rated triple-A by Moody's, S&P and Fitch. The credit carries stable outlooks from all three agencies.
Raymond James priced the Fort Worth Independent School District, Texas' $382.53 million of unlimited tax refunding and school building bonds. The deal, which is backed by the Permanent School Fund guarantee program, is rated triple-A by Moody's and S&P.
Piper Jaffray priced the Johnson County Unified School District No. 223, Kan.'s $326.94 million of Series 2016A general obligation school bonds and Series 2016B GO refunding bonds. The deal is rated Aa2 by Moody's and AA by S&P.
Goldman Sachs priced the Missouri Health and Educational Facilities Authority's $272.75 million of Series 2016B taxable educational facilities revenue bonds for the Washington University. The deal is rated triple-A by Moody's and S&P.
Citi priced Port St. Lucie, Fla.'s $207.91 million of Series 2016 utility system refunding bonds. The deal is rated A-plus by S&P and Fitch.
Robert W. Baird & Co. priced Hawaii's $204.84 million of highway revenue bonds. The deal is rated Aa2 by Moody's, AA-plus by S&P and AA by Fitch.
Siebert, Brandford Shank & Co. priced the Bexar County Hospital District, Texas's $201.165 million of limited tax refunding bonds. The deal is rated Aa1 by Moody's and AA-plus by S&P and Fitch.
BAML priced the Michigan State Housing Development Authority's $188.5 million of Series 2016A non-AMT, Series 2016E AMT, and Series 2016B taxable rental housing revenue bonds. The deal is rated AA by S&P, which gives it a stable outlook.
Citigroup priced the Lexington County Health Services District, S.C.'s $176.58 million of hospital revenue bonds. The deal is rated A1 by Moody's, AA-minus by S&P and A-plus by Fitch.
Wells Fargo priced the Will County, Ill.'s $175 million of GO bonds. The deal is rated Aa1 by Moody's and AA-plus by S&P.
JPMorgan Securities priced Jacksonville, Fla.'s $149.41 million of special revenue refunding bonds. The deal is rated Aa3 by Moody's and AA-minus by S&P and Fitch.
Wells Fargo Securities priced the Utah Transit Authority's $145.69 million of Series 2016 sales tax revenue refunding bonds consisting of serials and CABs. The deal is rated A1 by Moody's, A-plus by S&P and AA by Fitch.
BAML priced Leigh County, Pa's $135.98 million of general purpose authority hospital revenue refunding bonds for the Lehigh Valley Health Network. The deal is rated A1 by Moody's and A-plus by S&P.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar increased $1.27 billion to $8.65 billion on Friday. The total is comprised of $2.88 billion of competitive sales and $5.77 billion of negotiated deals.
Lipper: Muni Bond Funds See Inflows
For the 45th straight week, municipal bond funds reported inflows, according to Lipper data released on Thursday.
The weekly reporters saw $871.013 million of inflows in the week ended Aug. 10, after inflows of $783.930 million in the previous week, Lipper said.
The four-week moving average remained positive at $862.893 billion after being in the green at $950.662 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 experienced inflows, gaining $582.341 million in the latest week after inflows of $476.187 million in the previous week. Intermediate-term funds had inflows of $124.288 million after inflows of $122.531 million in the prior week.
National funds had inflows of $754.059 million on top of inflows of $666.956 million in the previous week. High-yield muni funds reported inflows of $287.447 million in the latest reporting week, after inflows of $267.286 million the previous week.
Exchange traded funds saw inflows of $90.117 million, after inflows of $76.659 million in the previous week.
