More big deals hit the municipal bond market on Thursday, as top-rated munis continued to show weakness in the face of the week's supply surge. Issuers from New York, California and Texas dominated the day's slate.
Citigroup priced the Dormitory of the State of New York's $1.12 billion of Series 2016D personal income tax revenue bonds for institutions following a one-day retail order period.
The DASNY deal was priced to yield from 1.02% with 3% and 5% coupons in a split 2019 maturity to 3.12% with a 3% coupon in 2038.
On Wednesday, Citi priced the issue for retail to yield from 0.99% with a 3% coupon and 5% coupon in a split 2019 maturity to 3.07% with a 3% coupon in 2038. No retail orders were taken in the 2028 through 2030, 2032 through 2035 or 2037 maturities.
The deal is rated Aa1 by Moody's Investors Service and triple-A by S&P Global Ratings.
JPMorgan Securities priced the City and County of San Francisco Public Utilities Commission, Calif.'s $899.06 million of Series 2016AB water revenue refunding bonds.
The $763.95 million of Series 2016 Subseries A refunding bonds were priced to yield from 1.08% with a 5% coupon in 2020 to 2.95% with a 4% coupon in 2036; a 2039 term bond was priced as 4s to yield 3.06%.
The $135.11 million of Series 2016 Subseries B refunding bonds were priced to yield from 0.78% with a 2% coupon in 2017 to 2.61% with a 2.50% coupon in 2030.
The deal is rated Aa3 by Moody's and AA-minus by S&P.
Since 2006, the San Francisco PUC has issued over $7 billion of bonds with the most issuance occurring in 2010 when it sold $1.7 billion of debt. The commission did not issue any bonds in 2007, 2008 or 2014.
Morgan Stanley priced the Texas Transportation Commission's $598.84 million of Series 2016A highway fund first tier revenue bonds. The issue was priced to yield from 0.85% with a 4% coupon in 2017 to 2.20% with a 5% coupon in 2030.
Additionally, Jefferies priced the TTC's $90 million of Series 2016B state highway fund first tier revenue refunding put bonds. The issue was priced as 4s to yield 1.40% with a 4% coupon in a bullet 2026 maturity with a 2021 mandatory put date. Both deals are rated triple-A by Moody's and S&P.
Bank of America Merrill Lynch priced Charlotte, N.C.'s $116.22 million of Series 2016A general obligation refunding bonds. The issue was priced to yield from 0.79% with a 3% coupon in 2017 to 2.65% with a 4% coupon in 2036. The deal is rated triple-A by Moody's, S&P and Fitch Ratings.
Secondary Market
The yield on the 10-year benchmark muni general obligation rose four basis points to 1.64% from 1.60% on Wednesday, while the yield on the 30-year gained two basis points to 2.45% from 2.43%, according to the final read of Municipal Market Data's triple-A scale.
Since last Thursday, yields have risen 14 to 16 basis points; the 10-year muni yielded 1.50% on Sept. 29 while the 30-year yield was at 2.29%.
"Tax-exempt trading continued to indicate a modestly weaker bias on Thursday, led by the intermediate range, as participants kept to the sidelines in advance of [Friday's] key employment report," MMD Research Analyst Gregory Saulnier said in a market comment.
Economists surveyed by IFR Markets expect September's non-farm payrolls to show a gain of 170,000 with the unemployment rate steady at 4.9%.
Treasuries were weaker on Thursday. The yield on the two-year Treasury rose to 0.85% from 0.84% on Wednesday, the 10-year Treasury yield gained to 1.74% from 1.71% and the yield on the 30-year Treasury bond increased to 2.46% from 2.43%.
The 10-year muni to Treasury ratio was calculated at 94.3% compared to 93.3% on Wednesday, while the 30-year muni to Treasury ratio stood at 99.7% versus 99.8%, according to MMD.
MSRB: Previous Session's Activity
The Municipal Securities Rulemaking Board reported 38,697 trades on Wednesday on volume of $16.87 billion.
Tax-Exempt Money Market Fund Outflows
Tax-exempt money market funds experienced outflows of $5.09 billion, bringing total net assets to $129.33 billion in the week ended Oct. 3, according to The Money Fund Report, a service of iMoneyNet.com. This followed an outflow of $5.13 billion to $134.40 billion in the previous week.
The average, seven-day simple yield for the 245 weekly reporting tax-exempt funds rose to 0.32% from 0.27% in the previous week.
The total net assets of the 872 weekly reporting taxable money funds decreased $30.11 billion to $2.494 trillion in the week ended Oct. 4, after an inflow of $19.63 billion to $2.524 trillion the prior before.
The average, seven-day simple yield for the taxable money funds increased to 0.13% from 0.12% from the week before.
Overall, the combined total net assets of the 1,117 weekly reporting money funds fell $35.19 billion to $2.623 trillion in the period ended Oct. 4, which followed an inflow of $14.50 billion to $2.658 trillion.
