Va. PBA, NYS , Texas offerings sell as investors stay bullish on muni funds
Municipal bonds held firm Wednesday as deals swarmed into the market from issuers in Virginia, New York and Texas.
The Virginia Public Building Authority (Aa1/AA+/AA+) competitively sold $337 million of public facilities revenue bonds in three sales on Wednesday.
Barclays Capital won the $178 million of Series 2019A tax-exempts with a true interest cost of 2.92%. Morgan Stanley won the $134 million of Series 2019B bonds subject to the AMT with a TIC of 3.09%. Wells Fargo Securities won the $25 million of Series 2019C taxables with a TIC of 2.60%. The financial advisor is Frasca & Associates; bond counsel is Kaufman & Canoles.
New York State (Aa1/AA+/AA+) competitively sold $115 million of Series 2019A tax-exempt new-money transportation, education and environmental purposes GOs.
Wells Fargo Securities won the bonds with a TIC of 1.668%. There were 10 other bidders for the GOs. The financial advisor is Public Resources Advisory Group. The bond counsel are the state attorney general and Hawkins Delafield.
Citigroup priced Texas’ Lower Colorado River Authority’s (NR/A/A-+) $370 million contract refunding revenue bonds for the LCRA Transmission Services Corp.
RBC Capital Markets priced the Mt. San Antonio Community College District (Aa1/AA/NR) of Los Angeles County, Calif.’s $311 million of Series 2019A Election of 2018 GOs.
RBC also priced the Michigan State Housing Development Authority’s (Aa2/AA+/NR) $234 million of Series 2019A single-family fixed-rate non-AMT mortgage revenue bonds for retail investors.
BofA Securities priced and repriced the Texas Water Development Board’s (NR/AAA/AAA) $222 million of new Series 2019 state revolving fund revenue bonds.
UBS Financial Services received the written award on the Regents of the University of California’s (Aa2/AA/AA) $539 million general revenue Series 2019 BC & BD taxable bonds.
Since 2009, the university has sold about $25 billion of securities, with the most issuance occurring in 2013 when it offered $4.7 billion. It sold the least amount in 2014, when it issued $970.4 million of debt.
Bond Buyer 30-day visible supply at $5.62B
The supply calendar fell $1.34 billion to $5.62 billion Wednesday, composed of $2.53 billion of competitive sales and $3.10 billion of negotiated deals.
ICI: Muni funds see $2.06B inflow
Long-term municipal bond funds and exchange-traded funds saw a combined inflow of $2.064 billion in the week ended March 6, the Investment Company Institute reported on Wednesday.
This followed an inflow of $2.626 billion from the tax-exempt mutual funds in the week ended Feb. 27.
Long-term muni funds alone saw an inflow of $1.890 billion after an inflow of $2.440 billion in the previous week while ETF muni funds saw an inflow of $174 million after an inflow of $186 million in the prior week.
Taxable bond funds saw combined inflows of $3.994 billion in the latest reporting week after inflows of $9.030 billion in the previous week. ICI said the total combined estimated outflows into all long-term mutual funds and exchange-traded funds were $135 million for the week ended March 6 after inflows of $11.939 billion in the prior week.
Strong inflows and weak volume in the municipal market are creating less supply pressure but increased demand, according to a New York trader.
“There’s continuous flows into the funds and any new issues that are decent are hard to keep on the shelves,” he said. “In New York, there’s not enough paper to meet the demand at all.”
He noted that demand is being boosted by the fact that the separately managed account business is growing and adding competition for paper among individual retail investors.
Meanwhile, investor behavior is being tempered by a weaker global economy, the Federal Reserve Board pausing its tightening bias and overall market uncertainty -- and some are sitting on the sidelines until they get further clarity.
“Portfolio managers are more bullish than traders,” he said. “Portfolio managers have a lot of cash to spend and as traders it’s not that we think rates will skyrocket, but when we buy, we’re not sure where we are going to sell our bonds,” he added
Municipal bonds were mostly stronger on Wednesday, according to the MBIS benchmark scale, with muni yields falling three basis points in the 10-year maturity while rising a basis point in the 30-year maturity. High-grade munis were also mostly stronger, with yields falling four basis points in the 10-year maturity as yields rose a basis point in the 30-year maturity.
Investment-grade municipals were steady on Refinitiv Municipal Market Data’s AAA benchmark scale, which showed the yields on the 10-year and 30-year muni unchanged.
Treasuries were stronger as equities traded up.
The 10-year muni-to-Treasury ratio was calculated at 78.6% while the 30-year muni-to-Treasury ratio stood at 95.4%, according to MMD.
Previous session's activity
The MSRB reported 39,744 trades on Tuesday on $10.96 billion of volume. California, Texas and New York were most traded, with the Golden State taking 15.601% of the market, the Lone Star State taking 12.696% and the Empire State taking 12.234%. The most active issue was the N.Y. MTA 5s of 2022 which traded 197 times on volume of $110.76 million.
Treasury auctions re-opened 30-year bonds
The Treasury Department auctioned $16 billion of 29-year 11-month bonds with a 3% coupon at a 3.014% high yield, a price of 99.722351. The bid-to-cover ratio was 2.25.
Tenders at the high yield were allotted 22.09%. The median yield was 2.950%. The low yield was 2.588%.
Gary Siegel contributed to this report.
Data appearing in this article from Municipal Bond Information Services, including the MBIS municipal bond index, is available on The Bond Buyer Data Workstation. Click here for a brief tour of the Workstation, or contact Ziad Saba at 212-803-6079 for more information.