Top-shelf municipal bonds ended weaker on Thursday, traders said, as the last of the week's big new issues hit the market.
Secondary Market
The yield on the 10-year benchmark muni general obligation rose one basis point to 1.43% from 1.42% on Wednesday, while the yield on the 30-year muni increased one basis point to 2.16% from 2.15%, according to the final read of Municipal Market Data's triple-A scale.
Treasuries also weakened on Thursday. The yield on the two-year Treasury rose to 0.75% from 0.69% on Wednesday, the 10-year Treasury yield gained to 1.57% from 1.51% and the yield on the 30-year Treasury bond increased to 2.28% from 2.23%.
The 10-year muni to Treasury ratio was calculated at 90.9% on Thursday compared to 94.0% on Wednesday, while the 30-year muni to Treasury ratio stood at 94.5% versus 96.4%, according to MMD.
Primary Market
In the competitive arena, Citigroup won the Florida Board of Education's $206.025 million of Series 2016E public education capital outlay bonds with a true interest cost of 2.49%.
The issue was priced to yield from 0.45% with a 5% coupon in 2017 to 2.83% with a 2.75% coupon in 2037; a 2039 maturity was priced as 2 3/4s to yield 2.86%, a 2041 maturity was priced as 2 3/4s to yield 2.90% and a 2046 maturity was priced as 3s to yield 2.95%.
The deal is rated Aa1 by Moody's Investors Service and triple-A by S&P Global Ratings and Fitch Ratings.
Bank of America Merrill Lynch won Milwaukee's $100 million of Series 2016S7 sewerage system revenue bonds with a TIC of 2.37%.
The issue was priced to yield from 0.55% with a 5% coupon in 2017 to 2.69% with a 3% coupon in 2033; a 2036 maturity was priced as 3s to yield 2.84%. The deal is rated AA-minus by S&P and AA by Fitch.
In the negotiated sector, BAML priced the Michigan State Housing Development Authority's $188.5 million of Series 2016A non-AMT, Series 2016E AMT, and Series 2016B taxable rental housing revenue bonds. The deal is rated AA by S&P, which gives it a stable outlook.
The $64.5 million of Series 2016A bonds, not subject to the alternative minimum tax, were all priced at par to yield from 0.70% and 0.80% in a split 2018 maturity to 2.55% and 2.60% in a split 2028 maturity, to yield 3% in 2032, 3.25% in 2037, 3.35% in 2042, 3.50% in 2047 and 3.625% in 2052.
The $26.67 million of Series 2016C AMT bonds were priced to yield about 70% of the three-month LIBOR plus 100 basis points.
The $97.33 million of Series 2016B taxables were also came to market; pricing information was not available.
Since 2006, the authority has sold $3.13 billion of securities, with the largest issuance coming in 2007 when it offered $916 million. After hitting a low in 2012 with just $11.1 million issued, the MSHDA has increased its issuance every year.
Wells Fargo Securities priced the Utah Transit Authority's $145.69 million of Series 2016 sales tax revenue refunding bonds consisting of serials and CABs.
The $126.78 million of subordinated sales tax revenue refunding current interest bonds were priced to yield from 2.27% with a 3% coupon in 2027 to 2.54% with a 4% coupon in 2031. The $18.91 million of subordinated sales tax revenue refunding capital appreciation bonds were priced at approximately 58.45 to yield 2.32% in a 2032 bullet maturity.
The deal is rated A1 by Moody's, A-plus by S&P and AA by Fitch.
Piper Jaffray received the official award on the Johnson County Unified School District No. 223, Kan.'s $326.94 million of Series 2016A general obligation school bonds and Series 2016B GO refunding bonds.
The $129.07 million of Series 2016A GOs were price to yield from 0.62% with a 2% coupon in 2017 to 2.62% with a 4% coupon in 2036. The $197.87 million of Series 2016B GO refunding bonds were priced to yield from 0.89% with a 2% coupon in 2019 to 2.53% with a 4% coupon in 2033. The deal is rated Aa2 by Moody's and AA by S&P.
Tax-Exempt Money Market Fund Outflows
Tax-exempt money market funds experienced outflows of $4.45 billion, bringing total net assets to $179.71 billion in the week ended Aug. 8, according to The Money Fund Report, a service of iMoneyNet.com. This followed an outflow of $1.76 billion to $184.16 billion in the previous week.
The average, seven-day simple yield for the 271 weekly reporting tax-exempt funds was unchanged from 0.08% in the previous week.
The total net assets of the 889 weekly reporting taxable money funds decreased $6.09 billion to $2.528 trillion in the week ended Aug. 9, after an inflow of $14.64 billion to $2.534 trillion the prior before.
The average, seven-day simple yield for the taxable money funds remained at 0.11% from the week before.
Overall, the combined total net assets of the 1,160 weekly reporting money funds fell $10.54 billion to $2.708 trillion in the period ended Aug. 9, which followed an inflow of $12.88 billion to $2.718 trillion.
MSRB: Previous Session's Activity
The Municipal Securities Rulemaking Board reported 35,102 trades on Wednesday on volume of $13.52 billion.
