The new issue market continued to do well, as evidenced by the strong demand for Wednesday’s deals, market particuipants said Wednesday.
The Massachusetts Bay Transportation Authority deal and California’s West Contra Costa Unified School District deal in California set the tone, according to Rick Marrone, senior portfolio manager at Washington Cross Advisors in San Francisco.
“With yields at such low levels, it’s difficult to find much of value and you wonder when the market will pause — especially now that we’re back near more ‘normal’ ratios,” Marrone said Wednesday afternoon. “But now that we’re entering the strong seasonal reinvestment period, demand could and should still be present,” he added, calling it an overall “tough market.”
Municipals were little changed in secondary trading.
Primary market
Barclays Capital priced and repriced the Washington Metropolitan Area Transit Authority’s (NAF/AA/AA/AA+) $545 million of dedicated revenue bonds to lower yields.
The bonds were repriced to yield from 0.36% with a 5% coupon in 2023 to 2.04% with a 4% coupon in 2040; a split 2045 term bond was priced to yield 2.17% with a 4% coupon and 1.99% with a 5% coupon.
The D.C. bonds had been tentatively priced to yield from 0.40% with a 5% coupon in 2023 to 2.09% with a 4% coupon in 2040; a split 2045 term bond was priced to yield 2.25% with a 4% coupon and 2% with a 5% coupon.
BofA Securities priced and repriced the Massachusetts Bay Transportation Authority’s (Aa3/AA/NR/NR) $385.33 million of Series 2020B subordinated sales tax bonds to lower yields in some maturities.
The Subseries B1 bonds were repriced with 5% coupons to yield from 0.25% in 2021 to 1.78% in 2041; a 2045 term bond was priced to yield 1.88% and a 2050 term was priced to yield 1.95%.
The Subseries B2 sustainability bonds were repriced as 5s to yield 0.27% in 2022.
The Subseries B1 bonds were tentatively priced with 5% coupons to yield from 0.25% in 2021 to 1.78% in 2041; a 2045 term bond was priced to yield 1.93% and a 2050 term was priced to yield 1.98%. The Subseries B2 sustainability bonds were priced as 5s to yield 0.30% in 2022.
BofA received the official award in the Carnegie Institute of Washington’s (Aa2/AA+/NR/NR) $100 million of taxable corporate CUSIP bonds.
Morgan Stanley received the written award on the Wisconsin Center District’s $81.445 million of taxable Series 2020A senior dedicated tax revenue bonds and Series 2020B junior dedicated tax revenue bonds, supported by state of Wisconsin’s moral obligation.
The senior bonds (A2:A3u/AA:BBBu/NR/NR) and the junior bonds (NR:A1u/AA:A+u/NR/NR) were insured by Assured Guaranty Municipal Corp.
JPMorgan priced the West Contra Costa Unified School District, Calif.’s $130 million of general obligation bonds, 2010 Election 2020 Series F and 2012 Election 2020 Series E.
The Series F bonds were priced to yield from 0.40% with a 4% coupon in 2020 to 2.45% with a 3% coupon in 2040; a 2045 term was priced to yield 2.67% with a 3% coupon and a 2049 term was priced to yield 2.26% with a 4% coupon.
The Series E bonds were priced to yield from 0.40% with a 4% coupon in 2020 to 2.45% with a 3% coupon in 2040; a 2045 term was priced to yield 2.67% with a 3% coupon and a 2049 term was priced to yield 2.26% with a 4% coupon.
All maturities with the exception of 2020 and 2021 were insured by Assured Guaranty Municipal. The deal was rated AA by S&P Global Ratings.
In the competitive arena, Wisconsin (Aa1/AA/NR/AA+) sold $213.615 million of taxable general obligation bonds.
JPMorgan Securities won the deal with a true interest cost of 2.2942%.
The bonds were priced to yield from 0.16% with a 5% coupon in 2021 to 1.74$ with a 4% coupon in 2040.Proceeds will be used for various governmental purposes.
Municipal officials are acting as the financial advisor; Foley & Lardner is the bond counsel.
The Virginia Beach Development Authority (Aa1/AA+/AA+/NR) sold $195.85 million of public facilities revenue bonds.
JPMorgan won the bonds. Proceeds will be used to finance various capital improvements including building a sports center and replacing the City Hall building.
Public Resources Advisory Group is the financial advisor; Kutak Rock is the bond counsel.
ICI: Muni bond funds see $1.9B inflow
Long-term municipal bond funds and exchange-traded funds saw combined inflows of $1.939 billion in the week ended May 27, the Investment Company Institute reported Wednesday.
In the previous week, muni funds saw inflows of $2.307 billion, ICI said.
Long-term muni funds alone had an inflow of $1.650 billion in the latest reporting week after an inflow of $1.625 billion in the week ended May 20.
ETF muni funds alone saw an inflow of $289 million after an inflow of $682 million in the prior week.
Taxable bond funds saw combined inflows of $15.509 billion in the latest reporting week after inflows of $16.173 billion in the prior week.
ICI said the total combined estimated inflows from all long-term mutual funds and ETFs were $16.168 billion after inflows of $5.612 billion in the previous week.
Secondary market
Municipals ended little changed again on Wednesday.
On MMD’s AAA benchmark scale, the yields on the 2021-2023 maturities were flat at 0.16%, 0.19% and 0.23%, respectively. The yield on the 10-year GO was steady at 0.84% while the 30-year was flat at 1.65%.
The 10-year muni-to-Treasury ratio was calculated at 110.4% while the 30-year muni-to-Treasury ratio stood at 106.5%, according to MMD.
The ICE AAA municipal yield curve also showed yields remaining basically flat Tuesday, with the 2021-2023 maturities yielding 0.150%, 0.178% and 0.229%. Out longer it was the same story with yields on the 10- and 30-year maturities unchanged at 0.824% and 1.646%, respectively.
ICE reported the 10-year muni-to-Treasury ratio stood at 114% while the 30-year ratio was at 104%.
The IHS Markit municipal analytics AAA curve showed the 2021 maturity at 0.19%, the 2022 maturity at 0.24% and the 2023 maturity at 0.27% while the 10-year muni was at 0.87% and the 30-year stood at 1.64%.
Munis were little changed on the MBIS benchmark scale.
Treasuries were weaker as equities traded higher.
The three-month Treasury was yielding 0.160%, 10-year Treasury was yielding 0.761% and the 30-year was yielding 1.552%.
The Dow rose 1.89%, the S&P 500 increased 1.31% and the Nasdaq gained 0.78%.