A light primary schedule coupled with a strengthening market made for high subscription rates and low borrowing costs in Thursday's competitive and primary markets, traders said.
Interest was so high for many of the deals that a handful repriced to better reflect the market's appetite.
"Everyone was all over the same few deals today, so the dealers followed suit by repricing the maturities to better match the commotion," said a Midwest trader. "It was a borrower's dream out there."
One such deal was the Florida Board of Education issuance, where its structure both met retail's high demand for longer dated paper and the issuers want for cheap capital, said a second Midwest trader.
"With the 3s in the long end, that's a retail coupon," said a second Midwest trader, "Those are some very discounted bonds targeted to the retail audience that's been demanding them."
Citigroup won the bid for the $114.53 million Florida Board of Education public education capital outlay refunding bonds. The bonds have yields ranging from 0.11% with a 5% coupon in 2015 to 3.10% with a 3% coupon in 2029.
"A 3% coupon helps the borrower with very cheap borrowing costs and finds the retail customer willing to do that," the second trader added.
The bonds are rated Aa1 by Moody's Investors Service and triple-A by Standard & Poor's and Fitch Ratings. The bonds contain a call at par in 2024.
The Charleston, South Carolina deal was also met with intense interest, allowing the dealer to reprice it from its original yields five to nine basis points, said the first Midwest trader.
Wells Fargo Securities received the written award on a $111.57 million Charleston Education Excellence Financing Corporation, S.C., installment purchase revenue refunding bonds with final yields ranging from 1.40% with a 5% coupon in 2019 to 3.20% with a 5% coupon in 2031.
"It's a strongly rated school district, so it was no surprise," said the trader.
The bonds can be called in 2024 at par, and earned ratings of Aa2 from Moody's and AA from S&P.
A STRENGTHENING MARKET
Thursday market benefitted from the light calendar, but also from an overall strengthening market. Municipals strengthened on Thursday, following the treasury market's movement in the morning.
"There's a much better tone to the market today," said the second Midwest trader. "There's better trading after opening up stronger with much more customer interest thanks to the overnight Treasury movement."
Yields fell across the curve, according to the Municipal Market Advisor's 5% triple A-scale. Yields fell most dramatically in the intermediate part of the curve, falling as much as three basis point for the 10-year to 2.18%, while the long end of the curve saw drops between two and three basis points, with the 30-year closing at 3.36%. The two-year note fell one basis point to .30%.
The Municipal Market Data's triple-A scale largely mimicked MMA's, with the market strengthened up to three basis point in the 2021 to 2024 year maturity range. The short end up to 2017 remained up changed, while 2018 fell one basis point and 2019 and 2020 fell two. The long end between 2025 and 2044 fell two basis point while the two-year benchmark closed a 2.424%.
The market's strength followed a rally in treasuries that began in overnight bidding. Treasuries opened strong and continued their strength throughout the trading day. The 30-year closed down four basis points from Wednesday at 3.323%, the 10 year down six basis points at 2.43% and the two year note was down two basis points at .44%.
Secondary trading mostly strengthen on Thursday, with Ohio's Buckeye tobacco as the exception, with yields weakening slightly on its 5.875s in 2047 to 7.84% from 7.82%, according to Markit. Other larger movers were the commonwealth of Pennsylvania GO 5s in 2022 which strengthen marginally to 2.20% from 2.21%, and the State of Wisconsin's GOs where yields on its 5s in 2023 rose to 2.31% from 2.32%.
MUNI MONEY MARKETS GROW
After three prior weeks of trending downward, the assets of tax-exempt money market funds grew by $2.68 billion to $258.52 billion in the week ended Aug. 4, according to The Money Fund Report, a service of iMoneyNet.com.
The inflows come after last week's losses of $908.2 million after which assets fell to $255.84 billion.
The average, seven-day yield for the 418 weekly reporting tax-exempt funds was unchanged at 0.01%, while the average maturity declined by one day to 34 days compared to last week.
Taxable money market funds, meanwhile, lost $1.59 billion and settled at $2.331 trillion in the week ended Aug. 5, down from $2.80 billion of inflows last week when the funds settled at $2.333 trillion.
The average seven-day yield of the 1,010 weekly reporting taxable money funds remained steady at 0.01%, while the average maturity was steady at 43 days.
The combined total net assets of the 1,428 weekly reporting money funds rose by $1.09 billion in the week ended Aug. 5 to $2.590 trillion, which compares to the previous week when assets rose by $1.89 billion to $2.589 trillion.
