Top-rated municipal bonds were weaker at mid-session, according to traders, as the last of the week's big new issues came to market, topped by the sale of four competitive offerings from Columbus, Ohio.
Secondary Market
The yield on the 10-year benchmark muni general obligation rose by as much as two basis points from 1.45% on Wednesday, while the yield on the 30-year muni was one to three basis points higher from 2.12%, according to a read of Municipal Market Data's triple-A scale.
U.S. Treasuries were narrowly mixed on Thursday. The yield on the two-year Treasury fell to 0.70% from 0.71% on Wednesday as the 10-year Treasury yield dipped to 1.57% from 1.58% and the yield on the 30-year Treasury bond was unchanged from 2.30%.
On Wednesday, the 10-year muni to Treasury ratio was calculated at 91.9% compared to 93.2% on Tuesday, while the 30-year muni to Treasury ratio stood at 92.4% versus 92.8%, according to MMD.
MSRB: Previous Session's Activity
The Municipal Securities Rulemaking Board reported 35,225 trades on Wednesday on volume of $12.77 billion.
S&P Muni Index Hits Record Low
"Demand continues to outstrip the supply of U.S. investment-grade corporate and municipal bond issues, as investors seek incremental yield over Treasuries and safe harbors during volatile periods," J.R. Rieger, managing director and global head of fixed income at S&P Dow Jones Indices
The weighted average yield of bonds in the
The taxable equivalent yield of the bonds in the S&P Municipal Bond Index is currently right on top of the yield of the corporate bonds in the
Primary Market
In the competitive arena on Thursday, Columbus, Ohio, sold five separate issues totaling over $480 million.
Morgan Stanley won the biggest piece – the $372.32 million of Series 2016A various purpose unlimited tax bonds with a true interest cost of 2.34%. Pricing information was not available.
The deal is rated triple-A by Moody's Investors Service, S&P Global Ratings and Fitch Ratings.
In the negotiated sector, Morgan Stanley priced Aurora, Colo.'s $437.96 million of Series 2016 first lien water refunding green bonds.
The issue was priced to yield from 0.83% with a 1.50% coupon in 2020 to 2.26% with a 5% coupon in 2036; a 2041 split maturity was priced as 3s to yield 2.90% and as 5s to yield 3.32%. A 2046 maturity was split into three, with a step coupon priced at par to yield 2%, bearing interest from 2% in 2016 and increasing in step intervals until 5% in 2046; the other two parts of the 2046 maturity were priced as 4s to yield 2.62% and as 5s to yield 3.27%. The deal is rated AA-plus by S&P and Fitch.
Since 2006, Aurora has issued about $1.5 billion of debt, with the largest issuance before this sale occurring in 2007 when it sold $422 million of securities. Aurora has barely come to market over the past 10 years and took a three-year hiatus from 2011-2013.
JPMorgan Securities is set to price the North Harris County Regional Water Authority, Texas' $259.21 million of Series 2016 senior lien revenue and refunding bonds. The deal is rated AA-minus by S&P and A-plus by Fitch.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar decreased $821.3 million to $11.13 billion on Thursday. The total is comprised of $4.38 billion of competitive sales and $6.75 billion of negotiated deals.
Tax-Exempt Money Market Fund Outflows
Tax-exempt money market funds experienced outflows of $1.25 billion, bringing total net assets to $188.42 billion in the week ended July 18, according to The Money Fund Report, a service of iMoneyNet.com. This followed an outflow of $4.29 million to $189.67 billion in the previous week.
The average, seven-day simple yield for the 274 weekly reporting tax-exempt funds increased to 0.07% from 0.06% the previous week.
The total net assets of the 888 weekly reporting taxable money funds decreased $7.99 billion to $2.502 trillion in the week ended July 19, after an inflow of $22.22 billion to $2.510 trillion the prior before.
The average, seven-day simple yield for the taxable money funds was steady at 0.11% from the week before.
Overall, the combined total net assets of the 1,162 weekly reporting money funds decreased $9.24 billion to $2.691 trillion in the period ended July 19, which followed an inflow of $17.92 billion to $2.700 trillion.
