Municipal bond buyers saw more supply come to market in Wednesday as retail investors kept up their confidence in tax-free bond funds.
Primary market
Raymond James & Associates priced the Metropolitan District of Hartford County, Connecticut’s (Aa3/AA/NR) $157.98 million of issue of 2019 general obligation bonds, consisting of the Series A GOs and Series B and C refunding GOs.
JPMorgan Securities priced the Memorial Hospital Service District of Calcasieu Parish, Louisiana’s (NR/BB+/NR) $104.94 million of hospital revenue and refunding bonds for the Lake Charles Memorial Hospital Project.
In the competitive arena, the Anderson County School District No. 1, South Carolina, (Aa1/AA/NR) sold $109 million of Series 2019C GOs. Morgan Stanley won the bonds with a true interest cost of 2.7894%. The bonds are backed by the South Carolina School District Enhancement Program.
Compass Municipal Advisors is the financial advisor; Burr Forman McNair is the bond counsel. Proceeds will be used to finance various school improvements.
Wednesday’s bond sales
Late Tuesday, New York City announced details on its sale of about $1.54 billion of tax-exempt and taxable general obligation bonds.
Ramirez & Co. priced New York City’s (Aa1/AA/AA) $937.94 million of tax-exempt general obligation bonds consisting of Fiscal 2020 Series A Subseries A-1, Fiscal 2006 Series F Subseries F-4B, Fiscal 2006 Series H Subseries H-A and Fiscal 2008 Series J Subseries J-8 on Monday and Tuesday.
The city said that during the retail order period for the tax-exempts on Monday and Tuesday that $237 million of orders from individual investors were received, of which about $190 million was usable.
During the institutional order period later Tuesday, the city said it received around $1.03 billion of priority orders, representing 1.4 times the bonds offered for sale to institutional investors.
Yields were then increased by one basis point for the 2041 and 2043 maturities, as well as for the 5% GO due in 2045. Final yields ranged from 1.12% in 2021 to 3.00% in 2045 for the 3% coupon bond and 2.48% for the 5% coupon bond.
The tax-exempts were priced by the city’s underwriting syndicate, led by book-running lead manager Ramirez and joint lead manager The Williams Capital Group with BofA Securities, Citigroup, Goldman Sachs, JPMorgan Securities, Jefferies, Loop Capital Markets, RBC Capital Markets and Siebert Cisneros Shank & Co. serving as co- senior managers.
The city also competitively sold $600 million of taxable in two offerings. The first series of about $339 million, due 2022 to 2029, attracted nine bidders with BofA winning with a true interest cost of 2.499%. The second series of around $261 million, due 2030 to 2034, attracted 10 bidders with Morgan Stanley winning with a TIC of 2.941%.
Secondary market
Munis were stronger in late trade on the
On Refinitiv Municipal Market Data’s AAA benchmark scale, the yield on both the 10- and 30-year GOs fell by one basis point to 1.54% and 2.25%, respectively.
“Muni yields are little changed as the market digests the new issue calendar,” ICE Data Services said in a Wednesday market comment. “High-yield and tobaccos are mixed. Puerto Rico bonds are unchanged as the market await news regarding Gov. Rossello’s resignation as a result of burgeoning scandals.”
The 10-year muni-to-Treasury ratio was calculated at 75.0% while the 30-year muni-to-Treasury ratio stood at 87.2%, according to MMD.
Treasuries were weaker as stocks traded higher. The Treasury three-month was yielding 2.093%, the two-year was yielding 1.817%, the five-year was yielding 1.815%, the 10-year was yielding 2.054% and the 30-year was yielding 2.582%.
Previous session's activity
The MSRB reported 34,096 trades Tuesday on volume of $10.263 billion. The 30-day average trade summary showed on a par amount basis of $11.09 million that customers bought $5.84 million, customers sold $3.30 million and interdealer trades totaled $1.95 million.
California, Texas and New York were most traded, with the Golden State taking 16.77% of the market, the Lone Star State taking 10.815% and the Empire State taking 8.312%.
The most actively traded security was the Illinois Series 2003 GO 5.1s of 2033, which traded 22 times on volume of $37.74 million.
ICI: Muni funds see $2.5B inflow
Long-term municipal bond funds and exchange-traded funds saw a combined inflow of $2.533 billion in the week ended July 17, the Investment Company Institute reported on Wednesday.
It was the 28th straight week of inflows into the tax-exempt mutual funds and followed an inflow of $2.164 billion in the previous week.
Long-term muni funds alone saw an inflow of $2.211 billion after an inflow of $1.903 billion in the previous week; ETF muni funds alone saw an inflow of $322 million after an inflow of $261 million in the prior week.
Taxable bond funds saw combined inflows of $8.567 billion in the latest reporting week after inflows of $7.694 billion in the previous week.
ICI said the total combined estimated inflows from all long-term mutual funds and ETFs were $10.449 billion after inflows of $11.397 billion in the prior week.
Treasury sells notes
The Treasury Department Wednesday auctioned $41 billion of five-year notes, with a 1.75% coupon, a 1.824% high yield, a price of 99.647902. The bid-to-cover ratio was 2.26.
Tenders at the high yield were allotted 82.71%. All competitive tenders at lower yields were accepted in full. The median yield was 1.779%. The low yield was 1.700%.
Treasury also auctioned $20 billion of two-year floating rate notes with a high discount margin of 0.220%, at a 0.220% spread, a price of par. The bid-to-cover ratio was 2.73.
Tenders at the high margin were allotted 54.37%. The median discount margin was 0.190%. The low discount margin was 0.170%.
The index determination date is July 22 and the index determination rate is 2.040%.
Gary E. 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.
