Top-shelf municipal bonds ended mixed on Friday as traders looked to a new issue calendar totaling over $7 billion for the holiday-shortened trading week. Financial markets observe Columbus Day on Monday.
Ipreo estimates total bond volume at $7.2 billion, up from a revised total of $4.42 billion this week, according to updated data from Thomson Reuters. The upcoming slate is comprised of $5.1 billion of negotiated deals and $2.1 billion of competitive sales.
Leading the upcoming slate of deals is the North Texas Tollway Authority’s $2.57 billion of system revenue and refunding bonds.
Bank of America Merrill Lynch is slated to price the deal on Thursday after holding a one-day retail order period. The issue is composed of Series 2017A first tier bonds and Series 2017B second tier bonds.
The Series 2017A first tiers are rated A1 by Moody’s Investors Service and A by S&P Global Ratings while the Series 2017B second tiers are rated A2 by Moody’s and A-minus by S&P.
Also on tap is an $897 million deal from the Airport Commission of the City and County of San Francisco.
Jefferies is expected to price the bonds for the San Francisco International Airport on Wednesday. The issue is comprised of Series 2017A, Series 2017D and Series 2018A bonds subject to the alternative minimum tax, Series 2017 non-AMT bonds and Series 2017C taxables.
The bonds are rated A1 by Moody’s and A-plus by S&P and Fitch Ratings.
In the competitive arena, the Los Angeles County Metropolitan Transportation Authority is selling $566.82 million of bonds in two separate offerings on Thursday.
The sales consist of $479.71 million of Series 2017A Proposition A first tier senior sales tax revenue green bonds and $87.11 million of Series 2017B Proposition A first tier senior sales tax revenue refunding bonds.
The deals are rated Aa1 by Moody’s and AAA by S&P.
The Lone Star State is also represented on the competitive slate, with Texas A&M selling $399.78 million of permanent university fund bonds in two offerings consisting of $309.83 million Series 2017B taxables and $89.95 million of Series 2017A tax-exempts.
Both deals are rated triple-A by Moody’s, S&P and Fitch.
The yield on the 10-year benchmark muni general obligation rose one basis point to 2.02% on Friday from 2.01% on Thursday, while the 30-year GO yield was unchanged from 2.83%, according to the final read of Municipal Market Data's triple-A scale.
U.S. Treasuries were mixed on Friday after the release of a weaker-than-expected employment report for September. Non-farm payrolls fell 33,000 last month, the first drop since 2010 as the jobless rate declined to 4.2%, a 16-year-low.
The yield on the two-year Treasury rose to 1.52% from 1.50% on Thursday, the 10-year Treasury yield gained to 2.37% from 2.35% and yield on the 30-year Treasury bond was unchanged from 2.90%.
On Friday, the 10-year muni-to-Treasury ratio was calculated at 85.4% compared with 85.6% on Thursday, while the 30-year muni-to-Treasury ratio stood at 97.5% versus 97.9%, according to MMD.
MSRB: Previous session's activity
The Municipal Securities Rulemaking Board reported 38,686 trades on Thursday on volume of $10.88 billion.
Week's actively traded issues
Some of the most actively traded bonds by type in the week ended Oct. 6 were from Puerto Rico, Arizona and California issuers, according to Markit.
In the GO bond sector, the Puerto Rico Commonwealth 8s of 2035 were traded 88 times. In the revenue bond sector, the Maricopa County Industrial Development Authority, Ariz., 4s of 2041 were traded 40 times. And in the taxable bond sector, the California 7.55s of 2039 were traded 13 times.
Week's actively quoted issues
Puerto Rico, Maryland and California names were among some of the most actively quoted bonds in the week ended Oct. 6, according to Markit.
On the bid side, the Puerto Rico Commonwealth GO 5s of 2041 were quoted by 114 unique dealers. On the ask side, the Prince George’s County, Md., revenue 3.25s of 2047 were quoted by 319 dealers. And among two-sided quotes, the California taxable 7.55s of 2039 were quoted by 27 unique dealers.
Lipper: Muni bond funds see outflows
Investors in municipal bond funds pulled cash out of the funds in the latest week, according to Lipper data released late Thursday.
The weekly reporters saw $140.336 million of outflows in the week of Oct. 4, after inflows of $378.211 million in the previous week.
Exchange traded funds reported inflows of $72.007 million, after inflows of $85.005 million in the previous week. Ex-EFTs, muni funds saw $212.343 million of outflows, after inflows of $293.206 million in the previous week.
The four-week moving average was positive at $263.309 million, after being in the green at $360.985 million in the previous week. A moving average is an analytical tool used to smooth out price changes by filtering out fluctuations.
Long-term muni bond funds had outflows of $136.354 million in the latest week after inflows of $302.608 million in the previous week. Intermediate-term funds had inflows of $117.108 million after inflows of $107.568 million in the prior week.
National funds had inflows of $58.823 million after inflows of $381.156 million in the previous week.
High-yield muni funds reported outflows of $13.655 million in the latest week, after inflows of $124.678 million the previous week.