Prices of top-rated municipal bonds closed unchanged, traders said, ahead of the upcoming week's chunky new issue slate. Muni yields ended the week only slightly higher, as the dramatic rise in yields, which began at the start of the month, has started to slow down.
The yield on the 10-year benchmark muni general obligation on Friday was steady at 2.08%, while the yield on 30-year GO was unchanged at 2.88%, according to the final read of Municipal Market Data's triple-A scale. On Feb. 13, the yield on the 10-year stood at 2.05% while the 30-year was yielding 2.87%.
However, since the start of February, yields on the 10-year have risen by 34 basis points and the yields on the 30-year are up by 38 basis points.
Treasury prices moved mostly higher on Friday. The yield on the two-year Treasury note rose to 0.64% from 0.62% on Thursday while the 10-year yield fell to 2.10% from 2.11% and the 30-year yield dropped to 2.70% from 2.72%.
The 10-year muni to Treasury ratio on Friday was calculated at 97.7% versus 98.3% on Thursday, while the 30-year muni to Treasury ratio stood at 105.4% compared to 105.4%.
Primary Market
Volume for the upcoming week is estimated at $8.807 billion, up from a revised $3.155 billion sold in the holiday-shortened week.
Several large deals came to market after President's Day, topped by the New York City Municipal Water Finance Authority's $530 million of water and sewer second general resolution revenue bonds.
On Thursday, Citigroup Global Markets priced the New York City Municipal Water Finance Authority's $530 million of water and sewer second general resolution revenue bonds. Traders said the deal was well received. The size of the issue was raised several times from its originally expected amount of $475 million. The bonds were rated Aa2 by Moody's and AA-plus by S&P and Fitch.
On Wednesday, Fairfax County, Va., sold $229.905 million of public improvement bonds in the competitive arena. Citi had the winning bid with a true interest cost of 2.6772%. Traders said there was good demand for the bonds. The issue was rated triple-A by Moody's, S&P and Fitch.
On Tuesday, New Mexico competitively sold $141.635 million of unlimited tax general obligation capital projects bonds. Morgan Stanley won the GOs with a TIC of 1.6893%.The issue was well received, according to traders. The bonds were rated triple-A by Moody's and AA-plus by S&P.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar rose $3.862 billion to $12.695 billion on Friday. The total is comprised of $2.954 billion competitive sales and $9.742 billion of negotiated deals.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 42,917 trades on Thursday on volume of $9.716 billion. Most active, based on the number of trades, was the Fairfax County, Va., 2015 Series A public improvement bonds 3s of 2030, which traded 202 times at an average price of 99.739, with an average yield of 2.976%.
The Week's Most Actively Quoted Issues
New York, California and Puerto Rico names were among the most quoted issues in the week of Feb. 16, according to data released by Markit.
Among bid-side quotes, the state of California 7 1/2s of 2034 were quoted by 13 unique dealers. Among ask-side quotes, the New York Metropolitan Transportation Authority revenue bond 5s of 2045 were quoted by 17 dealers. And among two-sided quotes, the Puerto Rico GO 8s of 2035 were quoted by nine dealers.
The Week's Top Traded Munis by Sector
Munis from issuers in Puerto Rico, Pennsylvania, and Connecticut were the top traded bonds by market sector in the week of Feb. 16, according to data released by Markit.
Looking at market sector makeup, revenue bonds comprised 55.29% of new issuance in the week of Feb. 16, down from 55.34% in the previous week. GOs comprised 36% of total issuance, up from 35.26%, while taxables made up 8.71%, down from 9.04%.
In the GO bond sector, Puerto Rico GO 8s of 2035 traded 42 times. In the revenue bond sector, Pennsylvania Higher Education Facilities Authority revenue 4s of 2045 traded 78 times. And in the taxable bond sector, the Hartford Stadium Authority, Conn., lease revenue 5 3/8s of 2042 traded 58 times.
Tax-Exempt Bond Funds See Inflows
Municipal bond funds which report weekly posted $59.047 million of inflows in the week ended Feb. 18, after experiencing inflows of $460.253 million in the week ended Feb. 11, according to the latest Lipper data.
The four-week moving average remained positive at $500.240 million in the latest week after being in the green at $678.287 million in the prior week. A moving average is an analytical tool used to smooth out price changes by filtering out fluctuations.
Muni bond funds so far have experienced inflows in each week of 2015, according to Lipper data. Inflows for the year total about $4.8 billion.
Long-term muni bond funds saw outflows of $118.225 million in the latest week, after experiencing inflows of $132.296 million in the previous week. The last time long-term funds saw outflows was on Dec. 31, 2014, when $267.407 million of cash was withdrawn.
High-yield muni funds recorded outflows of $219.980 million in the latest reporting week, after seeing outflows of $187.026 million in the prior week.
Exchange-traded funds had outflows of $33.536 million, after recording outflows of $109.534 million in the previous week.
In contrast, long-term municipal bond mutual funds saw $693 million of inflows in the week ended Feb. 11, according to the Investment Company Institute. ICI reported that inflows into long-term funds were $963 million in the week ended Feb. 4.
