Top shelf municipal bonds were stronger at mid-session, according to traders, who are looking ahead to next week’s smaller-than-average new issue calendar.
Ipreo estimates volume for next week at $4.24 billion, down from a revised total of $7.46 billion this week, according to Thomson Reuters. Next week’s slate consists of $3.62 billion of negotiated deals and $621.2 million of competitive sales.
The yield on the 10-year benchmark muni general obligation fell as much as two basis points from 1.92% on Thursday, while the 30-year GO yield dropped as much as two basis points from 2.71%, according to a read of Municipal Market Data's triple-A scale.
Treasuries were stronger on Friday. The yield on the two-year Treasury dropped to 1.34% from 1.36% on Thursday, the 10-year Treasury yield declined to 2.24% from 2.26% and the yield on the 30-year Treasury bond decreased to 2.81% from 2.84%.
On Thursday, the 10-year muni to Treasury ratio was calculated at 84.8%, compared with 85.1% on Wednesday, while the 30-year muni to Treasury ratio stood at 95.6% versus 95.9%, according to MMD.
MSRB: Previous session's activity
The Municipal Securities Rulemaking Board reported 40,975 trades on Thursday on volume of $13.77 billion.
Week's actively traded issues
Some of the most actively traded bonds by type in the week ended July 21 were from Texas, Pennsylvania and Illinois issuers, according to Markit.
In the GO bond sector, the Crandall ISD, Texas, 4s of 2043 were traded 24 times. In the revenue bond sector, the Pennsylvania Turnpike 4s of 2037 were traded 73 times. And in the taxable bond sector, the Illinois 5.1s of 2033 were traded 37 times.
Week's actively quoted issues
Illinois and New York names were among the most actively quoted bonds in the week ended July 21, according to Markit.
On the bid side, the Illinois taxable 5.1s of 2033 were quoted by 65 unique dealers. On the ask side, the New York City TFA revenue 4s of 2036 were quoted by 276 unique dealers. And among two-sided quotes, the Illinois taxable 5.1s of 2033 were quoted by 59 unique dealers.
Week’s primary market
It was an active week in the primary, with both the competitive and negotiated sectors seeing a lot of action.
The Dormitory Authority of the State of New York’s competitively sold $1.4 billion of state sales tax revenue bonds in four competitive sales. Bank of America Merrill Lynch won the $517.02 million of Series 2017A Group C bonds with a true interest cost of 3.76%; Jefferies won the $469.02 million of Series 2017A Group B bonds with a TIC of 3.44%; RBC Capital Markets won the $337.89 million of Series 2017A Group A bonds with a TIC of 2.00%; Citigroup won the $72.78 million of taxable Series 2017B bonds with a TIC of 1.71%. The DASNY deals are rated AAA by S&P Global Ratings and AA-plus by Fitch Ratings.
The state of North Carolina sold $618.42 million of Series 2017B limited obligation refunding bonds. Goldman Sachs won the bonds with a true interest cost of 2.23314%. The deal is rated Aa1 by Moody’s and AA-plus by S&P and Fitch.
The Virginia College Building Authority sold $592.66 million of educational facilities 21st Century College and equipment program revenue bonds in three separate sales. Bank of America Merrill Lynch won the $348.81 million of Series 2017C Tranche 2 bonds with a TIC of 3.18%. BAML also won the $143.93 million of Series 2017C Tranche 1 bonds with a TIC of 1.63%. Raymond James won the $99.92 million of Series 2017D taxable bonds with a TIC of 2.55%. The deals are rated Aa1 by Moody’s Investors Service and AA-plus by S&P and Fitch.
New Mexico competitively sold $369.78 million of bonds in two separate sales. Citigroup won the $300.31 million of capital projects general obligation and GO refunding bonds with a TIC of 1.56%. Morgan Stanley won the $69.47 million of Series 2017A severance tax bonds with a TIC of 1.74%. The GOs are rated Aa1 by Moody’s Investors Service and AA by S&P and the severance tax bonds are rated Aa2 by Moody’s and AA-minus by S&P.
In the negotiated sector, Loop Capital Markets priced the New Jersey Turnpike Authority’s $650.05 million of Series 2017B turnpike revenue bonds. The deal is rated A2 by Moody’s, A-plus by S&P and A by Fitch.
BAML priced the Georgia State Road and Tollway Authority’s $350.4 million of Series 2017A and B federal highway grant anticipation revenue and refunding revenue bonds and Series 2017A and B federal highway grant reimbursement revenue and refunding revenue bonds. The anticipation bonds are rated A2 by Moody’s, AA by S&P and A-plus by Fitch while the reimbursement bonds are rated A1 by Moody’s, AA by S&P and A-plus by Fitch.
Morgan Stanley priced the San Diego Regional Airport Authority’s $293.36 million of subordinate airport revenue bonds consisting of Series 2017A bonds not subject to the alternative minimum tax bonds and Series 2017B non-AMT bonds. The deal is rated A2 by Moody’s and A by S&P and Fitch.
Barclays Capital priced the Connecticut Health and Educational Facilities Authority’s $250 million of Series 2014A revenue bonds as a remarketing for Yale University. The deal is rated triple-A by Moody’s and S&P.
JPMorgan priced the Virginia Small Business Financing Authority’s $234.80 million of Series 2017 senior lien revenue bonds for the 95 Express Lanes LLC project. The deal is rated BBB by S&P and Fitch.
Morgan Stanley priced the Chicago Transit Authority’s $226.88 million of refunding Series 2017 capital grant receipts revenue bonds. The deal is rated A by S&P and BBB by Fitch.
Barclays Capital priced Massachusetts’ $200 million of consolidated loan of 2014 Series D multi-modal Subseries D-2 general obligation bonds. The deal is rated Aa1 by Moody’s, AA by S&P and AA-plus by Fitch.
Jefferies priced the Alaska Housing Finance Corp.’s $142.96 million of Series 2017A state capital project bonds. The deal is rated AA-plus by S&P and Fitch.
Citi priced the Monroe County Industrial Development Agency, N.Y.’s $124.41 million of Series 2017 school facility revenue bonds for the Rochester Schools modernization project. The deal is rated Aa2 by Moody’s and AA by S&P and Fitch.
JPMorgan Securities priced the Indiana Finance Authority’s $110.63 million of Series 2017A hospital refunding revenue bonds for Parkview Health. The deal is rated Aa3 by Moody’s and AA-minus by S&P.
Frost Bank priced the United Independent School District, Texas’ $103.64 million of Series 2017 unlimited tax school building bonds. The deal, which is backed by the Permanent School Fund guarantee program, is rated triple-A by Moody’s and Fitch.
Next week, New York City plans to sell about $860 million of general obligation bonds. The deals will consist of $800 million of tax-exempt fixed rate refunding bonds and a competitive sale of $60 million of taxable fixed-rate reoffered bonds.
Bond Buyer reports 30-day visible supply
The Bond Buyer's 30-day visible supply calendar increased $644.7 million to $6.05 billion on Friday. The total is comprised of $1.52 billion of competitive sales and $4.53 billion of negotiated deals.
Lipper: Muni bond funds see inflows
Investors in municipal bond funds reverse course and put cash back into the funds in the latest week, according to Lipper data.
The weekly reporters saw $298.554 million of inflows in the week of July 19, after outflows of $172.555 million in the previous week.
The four-week moving average was positive at $41.012 million, after being in the red at $256.274 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 had inflows of $183.175 million in the latest week after inflows of $77.841 million in the previous week. Intermediate-term funds had inflows of $84.015 million after outflows of $145.902 million in the prior week.
National funds had inflows of $342.243 million after outflows of $177.995 million in the previous week. High-yield muni funds reported inflows of $39.178 million in the latest reporting week, after inflows of $75.010 million the previous week.
Exchange traded funds saw inflows of $7.650 million, after outflows of $9.757 million in the previous week.