Competitive bond sales from issuers in South Carolina and Florida will dominate Thursday's supply slate as municipal bond traders will be watching yields, which are at or near record lows.
Primary Market
The South Carolina Transportation Infrastructure Bank is competitively selling $204.02 million of Series 2016A revenue refunding bonds. The deal is rated A1 by Moody's and A by Fitch.
The S.C. TIB last competitively sold comparable bonds was on June 18, 2015, when Wells Fargo Securities won $157.1 million of Series 2015A revenue refunding bonds with a true interest cost of 2.498%.
Since 2007, S.C. TIB has issued about $1.7 billion of debt, with the largest issuance occurring in 2012 when it sold $691 million of securities. This deal marks the first time since 2009 and 2010 when it issued debt in back-to-back years. The S.C. TIB did not come to market at all in 2008, 2011, 2013 or 2014.
The South Carolina Transportation Infrastructure Bank Act was signed on June 26, 1997, to focus greater attention on larger transportation projects, and thereby allow the South Carolina Department of Transportation to devote resources to other projects, according to the S.C. TIB website.
Also on the competitive slate for Thursday is Florida Board of Education's $216.18 million of Series 2016D full faith and credit public education capital outlay refunding bonds.
The deal is rated Aa1 by Moody's and triple-A by S&P and Fitch.
In the negotiated sector, Wells Fargo Securities is expected to price North Carolina's Wake Forest University's $175 million of Series 2016 educational facilities revenue and revenue refunding bonds.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar increased $1.27 billion to $7.95 billion on Thursday. The total is comprised of $4.37 billion of competitive sales and $3.58 billion of negotiated deals.
Secondary Market
U.S. Treasuries were weaker on Thursday. The yield on the two-year Treasury rose to 0.60% from 0.58% on Wednesday. The 10-year Treasury yield gained to 1.40% from 1.37% on Wednesday while the yield on the 30-year Treasury bond increased to 2.15% from 2.14%.
Municipal bonds strengthened on Wednesday as yields on top-rated securities fell to record and near-record low levels.
The yield on 10-year benchmark muni general obligation slipped one basis point to its previous record low of 1.29% from 1.30% on Tuesday, while the 30-year muni yield dipped one basis point to a record low of 1.93% from 1.94%, according to the final read of Municipal Market Data's triple-A scale. The 10-year yield first hit its record low of 1.29% on June 27.
The 10-year muni to Treasury ratio was calculated at 93.3% on Wednesday compared to 95.2% on Tuesday, while the 30-year muni to Treasury ratio stood at 89.7% versus 90.8%, according to MMD.
MSRB: Previous Session's Activity
The Municipal Securities Rulemaking Board reported 39,022 trades on Wednesday on volume of $9.47 billion.
Tax-Exempt Money Market Funds See Outflows
Tax-exempt money market funds experienced outflows of $945.1 million, bringing total net assets to $193.96 billion in the week ended July 4, according to The Money Fund Report, a service of iMoneyNet.com. This followed an outflow of $7.56 million to $194.91 billion in the previous week.
The average, seven-day simple yield for the 285 weekly reporting tax-exempt funds was unchanged at 0.07%.
The total net assets of the 888 weekly reporting taxable money funds decreased $24.83 billion to $2.488 trillion in the week ended July 5, after an inflow of $25.59 billion to $2.513 trillion the week before.
The average, seven-day simple yield for the taxable money funds was unchanged at 0.12%.
Overall, the combined total net assets of the 1,173 weekly reporting money funds decreased $25.77 billion to $2.682 trillion in the period ended June 28, which followed an inflow of $18.02 billion to $2.708 trillion.
