NYC, Cal State U. issues hit the screens; ICI reports $3B muni bond fund inflow

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Municipal bond buyers were treated to an influx of new issues on Wednesday, led by big deals from New York and California issuers.

The Investment Company Institute reported municipal bond funds and exchange-traded funds saw combined inflows of almost $3 billion in the latest reporting week.

Munis continued to weaken with yields on the AAA scales rising by as much as three basis points.

“Muni yields are rising again,” ICE Data Service said, adding, “taxable yields are about one to four basis points higher on the day."

Trade volumes were consistent with Tuesday’s levels.

Primary market
Citigroup priced and repriced New York City’s (Aa1/AA/AA/NR) $1.1 billion of Fiscal 2021 Series A and B tax-exempt GOs for institutional investors after holding a one-day retail order period.

The $951.925 million of Series A Subseries A-1 GOs were repriced to yield from 0.48% with 3% and 5% coupons in a split 2023 maturity to 1.86% with a 4% coupon in 2034.

The $148.87 million of Series B Subseries B-1 GOs were repriced to yield 0.24% with a 2% coupon in 2020 and to yield from 0.90% with 3% and 5% coupons in a split 2026 maturity to 1.63% with a 5% coupon in 2032.

The Series A Subseries A-1 GOs had been tentatively priced to yield from 0.48% with 3% and 5% coupons in a split 2023 maturity to 1.92% with a 4% coupon in 2034. The Series B Subseries B-1 GOs had been tentatively priced to yield 0.24% with a 2% coupon in 2020 and from 0.90% with 3% and 5% coupons in a split 2026 maturity to 1.65% with a 5% coupon in 2032.

On Tuesday, the Subseries A-1 GOs had been priced for retail to yield from 0.45% with 3% and 5% coupons in a split 2023 maturity to 1.80% with a 4% coupon in 2034; the Subseries B-1 GOs had been priced for retail to yield 0.25% with a 2% coupon in 2020 and from 0.79% with a 3% coupon in 2026 to 1.53% with a 5% coupon in 2032.

The city also competitively sold $286.245 million of taxable GOs in two offerings.

Morgan Stanley won the $150.79 million of Subseries A-2 taxable GOs with a true interest cost of 0.3677%.

BofA Securities won the $135.455 million of Subseries B-2 taxable GOs with a TIC of 1.7172%. The deal was priced at par to yield from 0.40% in 2021 to 0.80% in 2025 and from 2.02% in 2033 to 2.22% in 2037.

Acacia Financial Group and Public Resources Advisory Group were the financial advisors. Norton Rose and Bryant Rabbino were the bond counsel.

Goldman Sachs priced the Trustees of California State University’s (Aa2/AA-/NR/NR) of systemwide revenue bonds. The deal is composed of $528.59 million of Series 2020D taxables, $466.04 million of Series 2020E taxables.

The Series 2020D taxables were priced to yield from 20 basis points above the comparable U.S. Treasury security in 2022 to 198 basis points above Treasuries in 2038 and 140 basis points above Treasuries in 2042.

The Series 2020E taxables were priced to yield from 30 basis points above the comparable U.S. Treasury security in 2023 to 105 basis points above Treasuries in 2030, 148 basis points above Treasuries in 2051 and 185 and 155 basis points above Treasuries in a split 2060 maturity.

JPMorgan Securities priced Michigan’s (Aa2/AA+/NR/NR) $800 million of state trunk line fund bonds issued under the Rebuilding Michigan program.

MMD reported the 5s of 2030 at 1.03% were 26 basis points above the interpolated scale while the 5s of 2035 at 1.39% were +30 basis points, the 4s of 2040 at 1.79% were +50 basis points, or +30 basis points to the MMD 4% scale, and the 5s of 2045 at 1.78% were +35 basis points.

BofA priced the state of Iowa’s (Aa2/AA/NR/NR) $90.365 million of Series 2020A special obligation refunding bonds for the IJobs program. The bonds were priced with 5% coupons to yield from 0.17% in 2021 to 1.26% in 2034.

Ramirez & Co. received the written award of San Antonio, Texas’ (Aaa/AAA/AA+/NAF) $245.3 million of Series 2020 general improvement bonds, combination tax and revenue certificates of obligation, taxable combination tax and revenue COOs and tax notes.

Barclays Capital received the written award on St. Johns County Industrial Development Authority, Fla.’s (NR/AA/NR/NR) $168.815 million of Series 2020A&B taxable revenue bonds issued for Flagler Health. The bonds are insured by Assured Guaranty Municipal Corp.

On Thursday, Siebert Williams Shank is expected to price the Chicago Transit Authority’s (/A+//AA-) $345 million of second lien sales tax receipts revenue refunding bonds.

ICI: Muni bond funds see $2.9B inflow
Long-term municipal bond funds and exchange-traded funds saw combined inflows of $2.924 billion in the week ended Aug. 19, the Investment Company Institute reported Wednesday.

It marked the 16th week in a row the funds saw inflows. In the previous week, muni funds saw an inflow of $3.545 billion, ICI said.

Long-term muni funds alone had an inflow of $2.790 billion in the latest reporting week after an inflow of $2.898 billion in the prior week.

ETF muni funds alone saw an inflow of $134 million after an inflow of $647 million in the prior week.

Taxable bond funds saw combined inflows of $14.886 billion in the latest reporting week after inflows of $16.607 billion in the prior week.

ICI said the total combined estimated inflows from all long-term mutual funds and ETFs were $2.775 billion after a revised inflow of $16.222 billion in the previous week, originally reported as a $16.220 billion inflow.

Secondary market
Municipals were weaker across the curve, according to the final readings on Refinitiv MMD’s AAA benchmark scale Wednesday.

Yields were up two basis points in 2021 and 2022 to 0.15% and 0.16%, respectively. The yield on the 10-year muni rose two basis points to 0.77% while the 30-year yield gained three basis points to 1.51%.

The 10-year muni-to-Treasury ratio was calculated at 112.1% while the 30-year muni-to-Treasury ratio stood at 107.4%, according to MMD.

The ICE AAA municipal yield curve showed the 2021 maturity up one basis point to 0.140% and the 2022 maturity one basis point higher at 0.152%. The 10-year maturity rose three basis points to 0.757% and the 30-year gained three basis points to 1.516%.

ICE reported the 10-year muni-to-Treasury ratio stood at 115% while the 30-year ratio was at 106%.

The IHS Markit municipal analytics AAA curve showed the 2021 maturity yielding 0.15% and the 2022 maturity at 0.16% while the 10-year muni was at 0.78% and the 30-year stood at 1.50%.

Munis were little changed on the MBIS benchmark and AAA scales.

Treasuries were weaker as stock prices traded up.

The three-month Treasury note was yielding 0.105%, the 10-year Treasury was yielding 0.694% and the 30-year Treasury was yielding 1.404%.

The Dow rose 0.05%, the S&P 500 increased 0.67% and the Nasdaq gained 1.07%.

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Primary bond market Secondary bond market Municipal bond funds City of New York, NY California State University Trustees City of San Antonio, TX
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