The municipal bond market is poised to see the last of the week’s big deals hit the screens on Thursday, with California and New York issuers dominating the new issue slate.
Secondary Market
U.S. Treasuries were stronger on Thursday. The yield on the two-year Treasury dropped to 0.72% from 0.74% on Wednesday, while the 10-year Treasury yield declined to 1.73% from 1.75% and the 30-year Treasury bond yield fell to 2.55% from 2.58%.
Top shelf municipal bonds finished unchanged on Wednesday. The yield on the 10-year benchmark muni general obligation ended steady at 1.63% Wednesday, while the 30-year muni yield was flat at 2.61%, according to the final read of Municipal Market Data's triple-A scale.
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
Wells Fargo Securities is set to price the Regents of the University of California’s $554.23 million of general revenue bonds for institutions. The Series AR and AT were priced for retail investors on Wednesday; these and the taxable Series AS and AU will be priced for institutions on Thursday.
The $421.93 million Series AR bonds were priced for retail to yield from 0.58% with a 3% coupon in 2017 to 3.125% at par in 2038; 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.
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.
Wells is also set to price the Los Angeles Department of Water and Power’s $550 million of Series 2016A water system revenue bonds on Thursday.
Last week, S&P raised LADWP’s water revenue bond rating to AA-plus from AA. Moody’s and Fitch affirmed their ratings at Aa2 and AA, respectively. All three ratings agencies assign stable outlooks to the credit.
Goldman Sachs is set to price the Dormitory of the State of New York’s $392.46 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 for retail as 5s to yield 1.72% in 2026. The $130 million of Subseries 2016A-2 bonds were priced as 5s to yield 1.72% in 2026 and 2.66% in half of a split 2046 maturity, there was no retail orders for the other half of the 2046 maturity. The $212.46 million of Series 2016B bonds were priced to yield from 0.60% with 3% and 5% coupons in a split 2017 maturity to 2.10% with as 5% coupon in 2031. The issue is rated triple-A by Moody’s and S&P.
Also on Thursday, Morgan Stanley will price DASNY’s $149.79 million of Series 2016A revenue bonds for Fordham University.
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.
