Top-rated municipal bonds finished stronger on Thursday, traders said, as the last of the week's large sales hit the market, led by two big transportation deals from New York and New Jersey issuers.
Goldman Sachs priced a substantially upsized $1.2 billion deal for the Triborough Bridge and Tunnel Authority. The deal for the N.Y. MTA's bridges and tunnels, was originally sized at $665 million.
"The large upsizing occurred because the deal was so much in demand," said one New York trader. "There has been big demand all week for all the stuff that came. The Treasuries are helping of course, but there is a reasonable amount of money around and the past five trading sessions have been inflows, which is a reversal of what it was doing."
The TBTA's $300 million of Series 2017A general revenue bonds were priced to yield 1.78% with a 4% coupon in 2022, as 5s to yield from 2.09% in 2024 to 2.47% in 2027, at par to yield 3% in 2030, to yield from 2.91% with a 5% coupon in 2033 to 3.08% with a 5% coupon in 2038, as 5s to yield 3.11% in 2042, and as 5s to yield 3.16% in 2047.
The $903.39 million of Series 2017B general revenue refunding bonds were priced as 5s to yield from 2.09% in 2024 to 3.08% in 2038.
The TBTA deal is rated Aa3 by Moody's Investors Service, AA-minus by S&P Global Ratings and Fitch Ratings and AA by Kroll Bond Rating Agency.
Since 2007, the authority has issued about $10 billion of debt, with the largest issuance occurring in 2008 when it sold roughly $2.2 billion of debt. The authority's lowest issuance total in the past 10 years came in 2007 when it sold $223 million. With Thursday's sale, the TBTA has already issued the most debt for a year since 2013.
Bank of America Merrill Lynch priced the New Jersey Economic Development Authority's $621.54 million of Series 2017 transportation project sublease revenue and revenue refunding bonds for a New Jersey Transit Corp. project.
The $60.85 million of Series 2017A revenue bonds were priced as 5s to yield 4.30% in 2027. The $560.69 million of Series 2017B revenue refunding bonds were priced as 5s to yield from 2.73% in 2018 to 4.30% in 2027.
The deal is rated A3 by Moody's, BBB-plus by S&P and A-minus by Fitch.
Piper Jaffray received the official award on the University of Connecticut's $345.15 million of general obligation bonds.
The $311.2 million of Series 2017A GOs were priced to yield from 1.05% with a 2.5% coupon in 2018 to 3.54% with a 5% coupon in 2037. The $33.95 million of Series 2017A refunding GOs were priced to yield from 1.05% with a 2.5% coupon in 2018 to 2.11% with 5% and 4% coupon in a split 2022 maturity. The deal is rated Aa3 by Moody's, AA-minus by S&P and A-plus by Fitch.
In the competitive arena, Ohio sold $350 million of bonds in two separate deals.
Citigroup won the $300 million of Series 2017A common schools general obligation bonds with a true interest cost of 3.35%. The issue was priced as 5s to yield from 0.92% in 2018 to 2.67% in 2037. Robert W. Baird won the $50 million of Series 2017A conservation projects GOs with a TIC of 2.96%.
The deals are rated Aa1 by Moody's and AA-plus by S&P and Fitch.
The 10-year benchmark muni general obligation yield fell four basis points to 2.15% from 2.19% on Wednesday, while the yield on the 30-year GO dropped four basis points to 2.88% from 2.92%, according to the final read of Municipal Market Data's triple-A scale.
U.S. Treasuries were stronger on Thursday. The yield on the two-year Treasury dropped to 1.17% from 1.18% on Wednesday, while the 10-year Treasury yield decreased to 2.35% from 2.37%, and the yield on the 30-year Treasury bond declined to 2.95% from 2.96%.
Municipal CUSIP Requests Fell 27% in Dec.
Demand for new municipal CUSIP identifiers plunged 27% in December after dropping 10% in November, CUSIP Global Services said in a report released on Thursday. The report tracks requests by issuers for bond identifiers as an early indicator of new volume.
A total of 900 new municipal bond identifier requests were made last month, down from 1,231 in November.
December's results marked the first time since January 2016 that muni bond CUSIP activity fell below the 1,000 mark. Last month's performance was also the slowest month for bond identifier requests since January 2015.
On a year-over-year basis, CUSIP requests for new muni bond identifiers were up 6.2% last year to 15,714 from 14,802 in 2015, reflecting a strong appetite for new issuance throughout most of 2016.
Among all municipal asset classes, CUSIP demand rose 5.5% to 18,235, the best year since 2012 when 19,417 orders were processed.
"The new issuance market is clearly signaling a sense of uncertainty about future issuance volume as we head into 2017," Gerard Faulkner, director of operations for CUSIP Global Services, said in a press release. "With all signs pointing to a higher rate environment this year, it will be interesting to see whether issuers resume the frenetic pace we saw throughout 2015 and 2016 or whether they will revert to more historically normal volumes."
Tax-Exempt Money Market Fund Outflows
Tax-exempt money market funds experienced inflows of $1.37 billion, bringing total net assets to $131.64 billion in the week ended Jan. 9, according to The Money Fund Report, a service of iMoneyNet.com. This followed an outflow of $851.3 million to $130.27 billion in the previous week.
The average, seven-day simple yield for the 237 weekly reporting tax-exempt funds decreased to 0.25% from 0.27% in the previous week.
The total net assets of the 863 weekly reporting taxable money funds decreased $14.38 billion to $2.532 trillion in the week ended Jan. 10, after an outflow of $20.11 billion to $2.547 trillion the week before.
The average, seven-day simple yield for the taxable money funds increased to 0.25% from 0.24% in the previous week.
Overall, the combined total net assets of the 1,100 weekly reporting money funds fell $13.01 billion to $2.664 trillion in the week ended Jan. 10 after inflows of $20.96 billion to $2.677 trillion in the prior week.