Top-rated municipal bonds were weaker at mid-session, according to traders, as New York City hit the market with negotiated and competitive sales totaling over $1 billion.
Secondary market
The yield on the 10-year benchmark muni general obligation rose as much as one basis point from 1.87% on Wednesday, while the 30-year GO yield gained as much as one basis point from 2.75%, according to a read of Municipal Market Data's triple-A scale.
U.S. Treasuries were mixed on Thursday. The yield on the two-year Treasury rose to 1.36% from 1.35% on Wednesday, the 10-year Treasury yield was flat from 2.19% and the yield on the 30-year Treasury bond decreased to 2.78% from 2.79%.
On Wednesday, the 10-year muni-to-Treasury ratio was calculated at 85.3%, compared with 85.8% on Tuesday, while the 30-year muni-to-Treasury ratio stood at 98.5% versus 98.4%, according to MMD.
MSRB: Previous session's activity
The Municipal Securities Rulemaking Board reported 37,017 trades on Wednesday on volume of $9.91 billion.
Primary market
Siebert Cisneros Shank & Co. priced New York City’s $857.59 million of Fiscal 2018 Subseries B-1 and Series 1 general obligation bonds for institutions after a two-day retail order period.
The $550 million of the Subseries B-1 GOs were priced to yield 0.91% with a 3% coupon in 2019 and 1.05% with a 4% coupon in 2020 and from 2.36% with a 5.25% coupon in 2030 to 3.23% with a 4% coupon in 2041; a 2042 maturity was priced as 3 1/4s to yield 3.38%.
The $307.59 million of Series 1 GOs were priced as a remarketing to yield from 1.03% with 2% and 4% coupons in a split 2020 maturity to 2.61% with a 5% coupon in 2033.
In the competitive arena, the city sold $250 million of taxable GOs in two separate offerings.
Bank of America Merrill Lynch won the $190.62 million of Fiscal 2018 Subseries B-2 taxables with a true interest cost of 2.62%. The issue was priced at par to yield from 1.66% in 2020 to 2.90% in 2027.
Jefferies won the $59.38 million of Fiscal 2018 Subseries B-3 taxables with a TIC of 3.05%.
The deals are rated Aa2 by Moody’s Investors Service and AA by S&P Global Ratings and Fitch Ratings.
The negotiated sector went back to school on Thursday.
Bank of America Merrill Lynch priced the Board of Regents of the University of Texas System’s $246.07 million of Series 2017B revenue financing system bonds.
The issue was priced as 5s to yield 1.98% in 2027, at par as a step coupon bond to yield 2.50% in 2043, and as 3 3/8s to yield 3.50% and 4s to yield 3.22% in a split 2044 maturity.
The 2043 step coupon bond bears interest ranging from 2.50% in the 2017-2020 period to 5.10% in 2037-2043.
The deal is rated triple-A by Moody’s, S&P and Fitch.
Since 2008, the Regents have sold about $2.23 billion of securities, with the most issuance before this year occurring in 2015 when it sold $316 million. It did not come to market at all in 2016 and Thursday’s sale will make 2017 the highest issuance year for the past decade.
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Morgan Stanley is expected to price the Board of Governors of the Colorado State University System’s $111.94 million of system enterprise revenue bonds.
The deal, which is backed by the Colorado State Intercept Program, is rated Aa2 by Moody’s and AA-minus by S&P.
And JPMorgan Securities is expected to price the Board of Governors of the University of North Carolina’s $110 million of Series 2017 taxable general revenue refunding bonds for the University at Chapel Hill.
The deal is rated triple-A by Moody’s, S&P and Fitch.
RBC Capital Markets received the official award on the Regents of the University of Minnesota’s $410.05 million of tax-exempt Series 2017A general obligation bonds and Series 2017B GO refunding bonds.
The $117.095 million of Series 2017A bonds were priced to yield from 0.79% with a 4% coupon in 2018 to 2.80% with a 5% coupon in 2042.
The $292.955 million of Series 2017B bonds were priced to yield from 0.70% with a 2% coupon in 2017 to 3.125% at par in 2036.
The deal is rated Aa1 by Moody’s and AA by S&P.
Bank of America Merrill Lynch priced the Reedy Creek Improvement District, Fla.’s $194.87 million of Series 2017A ad valorem tax bonds.
The issue was priced to yield from 0.89% with a 5% coupon in 2019 to 2.89% with a 5% coupon in 2037.
The deal is rated Aa3 by Moody’s and AA-minus by S&P and Fitch.
Bond Buyer reports 30-day visible supply
The Bond Buyer's 30-day visible supply calendar decreased $1.94 billion to $8.32 billion on Thursday. The total is comprised of $4.36 billion of competitive sales and $3.97 billion of negotiated deals.
Tax-exempt money market funds see outflows
Tax-exempt money market funds experienced outflows of $692.4 million, lowering total net assets to $127.99 billion in the week ended Sept. 11, according to The Money Fund Report, a service of iMoneyNet.com.
This followed an outflow of $1.27 million to $128.69 billion in the previous week.
The average, seven-day simple yield for the 228 weekly reporting tax-exempt funds slid to 0.34% from 0.35% the previous week.
The total net assets of the 835 weekly reporting taxable money funds increased $24.36 billion to $2.582 trillion in the week ended Sept. 12, after an inflow of $6.57 billion to $2.558 trillion the week before.
The average, seven-day simple yield for the taxable money funds remained at 0.67% for the fifth week in a row.
Overall, the combined total net assets of the 1,063 weekly reporting money funds increased $23.7 billion to $2.710 trillion in the week ended Sept. 12, after inflows of $5.30 million to $2.686 trillion in the prior week.