Munis were stronger on Friday morning, as yields on some maturities were lower by as much as four basis points, according to traders who are putting a wrap on the holiday-shortened week, as they get set to see a hefty new issue slate next week – topped by the largest ever competitive slate of sales.
Secondary Market
Top-shelf municipal bonds were weaker to open up on Friday morning, after ended steady to stronger on Thursday. The yield on 10-year benchmark muni general obligation was anywhere from two to four basis points lower from 1.66% on Thursday, while the 30-year muni yield was anywhere from one to three basis points lower from 2.43% on Thursday, according to a read of Municipal Market Data's triple-A scale.
U.S. Treasuries were stronger on Friday. The yield on the two-year Treasury fell to 0.78% from 0.88% on Thursday, while the 10-year Treasury yield declined to 1.71% from 1.81% and the yield on the 30-year Treasury bond decreased to 2.52% from 2.58%.
The 10-year muni to Treasury ratio was calculated at 91.8% on Thursday compared to 90.1% on Tuesday, while the 30-year muni to Treasury ratio stood at 94.0% versus 93.4%, according to MMD.
MSRB: Previous Session's Activity
The Municipal Securities Rulemaking Board reported 42,876 trades on Thursday on volume of $12.206 billion.
Primary Market
Traders saw lighter than usual volume during this holiday shortened week.
The biggest sale of the week came from Pennsylvania, which competitively sold $988 million of unlimited tax general obligation bonds. Citigroup won the Keystone State's GOs with a true interest cost of 2.58%.The deal was well received, according to traders.
The bonds are rated Aa3 by Moody's Investors Service and AA-minus by S&P Global Ratings and Fitch Ratings except for the AGM-insured 2025 and 2034-2036 maturities which are rated Aa3 by Moody's and AA by S&P and AA-minus by Fitch.
The Dormitory Authority of the State of New York came to market with two separate negotiated deals totaling about $832 million for New York University. The bonds will fund various university projects.
Morgan Stanley priced DASNY's $585 million of Series 2016A tax-exempt revenue bonds Wells Fargo Securities priced DASNY's $247 million of Series 2016B taxable revenue bonds. The bonds are rated Aa3 by Moody's and AA-minus by S&P.
Goldman Sachs priced the Illinois Finance Authority's $137 million of Series 2016A revenue refunding bonds for the Northwest Community Hospital. The deal is rated A2 by Moody's and A-plus by S&P.
Bank of America Merrill Lynch priced the Rhode Island Commerce Corp.'s $229 million of R.I. Department of Transportation's Series 2016A grant anticipation refunding bonds. The bonds are rated A2 by Moody's and AA-minus by S&P.
Citigroup priced El Paso, Texas' $251.68 million of general obligation bonds and combination tax revenue certificates of obligation. The deal is rated AA by S&P and Fitch.
Citi also priced the Board of Trustees of Oakland University's $112.82 million of Series 2016 general revenue bonds. The deal is rated A1 by Moody's.
Barclays Capital priced the Sacramento Municipal Utility District's $151.43 million of Series 2016D electric revenue refunding bonds. The deal is rated Aa3 by Moody's and AA-minus by both S&P and Fitch.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar increased $4.01 billion to $15.97 billion on Friday. The total is comprised of $7.52 billion of competitive sales and $8.45 billion of negotiated deals.
Muni Bond Funds See Inflows for 35th Week in a Row
For the 35th straight week, municipal bond funds reported inflows, according to Lipper data released Thursday.
Weekly reporting funds saw $473.159 million of inflows in the week ended June 1, after inflows of $950.449 million in the previous week, Lipper said.
The four-week moving average remained positive at $970.242 million after being in the green at $1.029 billion 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 also experienced inflows, gaining $291.408 million in the latest week after inflows of $630.989 million in the previous week. Intermediate-term funds had inflows of $104.528 million after inflows of $217.643 million in the prior week.
National funds had inflows of $448.237 million on top of inflows of $916.041 million in the previous week. High-yield muni funds reported inflows of $178.633 million in the latest reporting week, after inflows of $333.190 million the previous week.
Exchange traded funds saw inflows of $92.783 million, after inflows of $110.156 million in the previous week.
