Wayne County, Mich., is on track to sell $186.9 million of delinquent tax anticipation notes on Thursday.
The note deal was postponed from last week after County Executive Warren Evans asked for state fiscal intervention to help it fix its financial problems.
The DTANs are set to be priced by Bank of America Merrill Lynch. Public Financial Management is municipal advisor and Axe & Ecklund is note counsel. The county also obtained the services of Orrick, Herrington & Sutcliffe as special bankruptcy counsel.
Standard & Poor's has assigned an SP1 rating to the deal, citing a "strong capacity to pay principal and interest." The borrowing is one the county makes regularly to cover late property tax collections owed to its local units. The county has about $144 million of DTANs outstanding.
In a related action, S&P put Wayne County's general obligation limited tax rating of BB-plus on CreditWatch with negative implications following the county's request for state intervention.
"The CreditWatch placement reflects our expectation that with the onset of actions under Michigan Act 436, the county could lose some of the autonomy currently held by the CEO and his staff," said Standard & Poor's analyst Jane Ridley.
S&P said that under the law if the request is approved by the state for a financial review, the Wayne County board could choose one of four possible outcomes: a consent agreement; appointment of an emergency manager; a neutral evaluation; or it could pursue a Chapter 9 bankruptcy filing.
Since 1999, the county has issued around $236 million of notes and about $855 million of bonds, according to Thomson Reuters. Before this week, most of the note issuance occurred in 2009 when it sold $104 million and most of the bond issuance took place in 2014 when it offered $207 million.
Secondary Market
Treasury prices were lower on Thursday with the yield on the two-year Treasury note rising to 0.70% from 0.68% on Wednesday, while the 10-year yield rose to 2.39% from 2.37% and the 30-year yield increased to 3.16 from 3.15%.
The yield on the 10-year benchmark muni general obligation closed unchanged on Wednesday from 2.32% on Tuesday, while the yield on the 30-year GO was flat at 3.30%, according to the final read of Municipal Market Data's triple-A scale.
The 10-year muni to Treasury ratio was calculated on Wednesday at 101.1% versus 96.4% on Tuesday, while the 30-year muni to Treasury ratio stood at 104.2% compared to 103.2%, according to MMD.
Tax-Exempt Money Market Funds Post Outflows
Tax-exempt money market funds experienced outflows of $1.24 billion, bringing total net assets to $243.88 billion in the period ended June 22, according to The Money Fund Report, a service of iMoneyNet.com. This followed an outflow of $970.8 million to $245.11 billion in the previous week.
The average, seven-day simple yield for the 390 weekly reporting tax-exempt funds remained at 0.01% for a 112th straight week.
The total net assets of the 986 weekly reporting taxable money funds fell $14.99 billion to $2.370 trillion in the period ended June 23, after experiencing an outflow of $14.99 billion to $2.370 trillion in the prior week.
The average, seven-day simple yield for the taxable money funds remained at 0.02% for the 23rd consecutive week.
Overall, the combined total net assets of the 1,376 weekly reporting money funds increased $18.61 billion to $2.634 trillion in the period ended June 23, which followed an outflow of $15.96 billion to $2.370 trillion the week before.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 43,642 trades on Wednesday on volume of $12.229 billion.
The most active bond, based on the number of trades, was the University of Vermont and State Agricultural College's Series 2015 GO 4s of 2040, which traded 256 times at an average price of 99.473 with an average yield of 4.024%. The bonds were initially priced at 97.816 to yield 4.14%.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar decreased $2.65 billion to $7.32 billion on Thursday. The total is comprised of $2.11 billion competitive sales and $5.21 billion of negotiated deals.
