Top-rated municipal bonds were weaker at mid-session, traders said, as primary issuance slowed down to a trickle on Thursday.
Market participants were eyeing yields, which continued to exhibit volatility in the wake of geopolitical events and concerns about the pace of interest-rate hikes by the Federal Reserve.
Although the market will watch what Fed Chair Janet Yellen and Vice Chair Stanley Fischer say Friday ahead of the blackout period, noted dove Lael Brainard, speaking Wednesday night, said a rate hike would be appropriate "soon." On Thursday, Governor Jerome Powell a rate hike "is on the table for discussion" in March.
Secondary Market
The 10-year benchmark muni general obligation yield rose as much as two basis points from 2.36% on Wednesday, while the yield on the 30-year GO increased one to three basis points from 3.12%, according to a read of Municipal Market Data's triple-A scale.
U.S. Treasuries were also weaker. The yield on the two-year Treasury rose to 1.31% from 1.28% on Wednesday, while the 10-year Treasury yield gained to 2.49% from 2.46%, and the yield on the 30-year Treasury bond increased to 3.09% from 3.07%.
On Wednesday, the 10-year muni to Treasury ratio was calculated at 96.1% compared to 97.1% on Tuesday, while the 30-year muni to Treasury ratio stood at 102.0%, versus 102.8%, according to MMD.
MSRB: Previous Session's Activity
The Municipal Securities Rulemaking Board reported 43,572 trades on Wednesday on volume of $11.95 billion.
Primary Market
Bank of America Merrill Lynch priced the Raleigh-Durham Airport Authority, N.C.'s $115.53 million of Series 2017A airport revenue refunding bonds subject to the alternative minimum tax.
The issue was priced to yield from 1.08% with a 5% coupon in 2018 to 3.64% with a 5% coupon in 2037; a 2017 maturity was offered as a sealed bid.
The deal is rated Aa3 by Moody's Investors Service and AA-minus by Fitch Ratings.
Since 2007, the authority has sold about $1.03 billion of bonds, with the most issuance coming in 2010 when it offered $375 million. The authority did not come to market in 2009, 2011 through 2014 or 2016. Thursday's sale gives the authority its highest yearly bond issuance since 2010 and its third highest since 2007.
RBC Capital Markets priced the Oklahoma Development Finance Agency's $251.68 million of Series 2017A tax-exempt and Series 2017B taxable revenue bonds for the Provident Oklahoma Education Resource Inc.'s Cross Village student housing project.
The $198.13 million of Series 2017A tax-exempts were priced as 5s to yield 4.45% in 2037, 4.53% in 2047, 4.70% in 2052 and as 5 1/4s to yield 4.81% in 2057.
The $53.55 million of Series 2017B taxables were priced at par to yield from 3.812% in 2020 to 5.362% in 2028 and 5.877% in 2037.
The deal is rated BBB-minus by S&P Global Ratings.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar decreased $1.6 billion to $9.13 billion on Thursday. The total is comprised of $4.47 billion of competitive sales and $4.65 billion of negotiated deals.
Tax-Exempt Money Market Fund Outflows
Tax-exempt money market funds experienced outflows of $1.19 billion, bringing total net assets to $130.43 billion in the week ended Feb. 27, according to The Money Fund Report, a service of iMoneyNet.com. This followed an inflow of $356.8 million to $131.63 billion in the previous week.
The average, seven-day simple yield for the 232 weekly reporting tax-exempt funds decreased to 0.21% from 0.22% in the previous week.
The total net assets of the 858 weekly reporting taxable money funds increased $13.38 billion to $2.521 trillion in the week ended Feb. 28, after an outflow of $6.23 billion to $2.507 trillion the week before.
The average, seven-day simple yield for the taxable money funds was unchanged from 0.27% in the prior week.
Overall, the combined total net assets of the 1,090 weekly reporting money funds rose $12.19 billion to $2.651 trillion in the week ended Feb. 28, after outflows of $5.87 billion to $2.639 trillion in the prior week.
