Mu­nic­i­pals, Trea­surys Rally as Mar­ket Goes Back to Work

The Bond Buyer - - Market News - By Chris­tine Al­bano & Chip Bar­nett

Mu­nic­i­pal bond traders re­turned to work on Thurs­day as the mar­ket took up where it left off on Tues­day — with muni and Trea­sury yields fall­ing.

The fixed-in­come mar­kets were closed on Wed­nes­day for the na­tional day of mourn­ing hon­or­ing for­mer Pres­i­dent Ge­orge H.W. Bush.

Mu­nic­i­pal bonds were stronger, ac­cord­ing to a mid­day read of the MBIS benchmark scale.

Benchmark muni yields fell as much as six ba­sis points in the one- to 30-year ma­tu­ri­ties.

High-grade mu­nis were stronger, with yields cal­cu­lated on MBIS' AAA scale de­creas­ing as much as six ba­sis points across the curve.

Mu­nic­i­pals were stronger on Mu­nic­i­pal Mar­ket Data’s AAA benchmark scale, which showed the yield on both the 10-year muni gen­eral obli­ga­tion and on the 30-year muni ma­tu­rity fall­ing two to four ba­sis points.

Trea­sury bonds were stronger.

The Trea­sury 30-year yield was at

3.123%, the

10-year stood at 2.850%, the five-year was at 2.725%, the two-year was at

2.734% while the Trea­sury three-month bill stood at 2.414%.

On Tues­day, the 10-year muni-to-Trea­sury ra­tio was cal­cu­lated at 83.2% while the 30-year muni-to-Trea­sury ra­tio stood at 98.7%, ac­cord­ing to MMD.

The muni-to-Trea­sury ra­tio com­pares the yield of tax-ex­empt mu­nic­i­pal bonds with the yield of tax­able U.S. Trea­sury with com­pa­ra­ble ma­tu­ri­ties. If the muni/ Trea­sury ra­tio is above 100%, mu­nis are yield­ing more than Trea­sury; if it is be­low 100%, mu­nis are yield­ing less.


Long-term tax-ex­empt mu­nic­i­pal bond funds saw an out­flow of $896 mil­lion in the week ended Nov. 28, the In­vest­ment Com­pany In­sti­tute re­ported Wed­nes­day.

This fol­lowed an out­flow of $578 mil­lion in the week ended Nov. 20 and out­flows of $770 mil­lion, $909 mil­lion, $1.196 bil­lion, $179 mil­lion, $1.310 bil­lion, and $1.653 bil­lion in the pre­vi­ous six weeks.

Tax­able bond funds saw an es­ti­mated out­flow of $2.636 bil­lion in the lat­est re­port­ing week, af­ter see­ing out­flows of $3.220 bil­lion and $1.543 bil­lion in the pre­vi­ous two weeks.

ICI said the to­tal es­ti­mated out­flows to long-term mu­tual funds and ex­change-traded funds were $13.268 bil­lion af­ter out­flows of $6.693 bil­lion and $34 mil­lion in the prior two weeks.

Bank of Amer­ica Mer­rill Lynch re­ceived the of­fi­cial award on the San Fran­cisco Bay Area Toll Au­thor­ity’s $402.11 mil­lion of toll bridge revenue bonds con­sist­ing of Se­ries 2018A term rate, Se­ries 2018B term-rate and Se­ries 2018C SIFMA in­dex-rate bonds.

The deal is rated Aa3 by Moody’s In­vestors Ser­vice and AA by S&P Global Rat­ings and Fitch Rat­ings.

RBC Cap­i­tal Mar­kets re­ceived the of­fi­cial award on the Mari­copa County In­dus­trial De­vel­op­ment Au­thor­ity, Ariz.’s $291.38 mil­lion of hos­pi­tal revenue bonds.

Bank of Amer­ica Mer­rill Lynch priced the Delaware River Port Au­thor­ity, Pa.’s $714.1 mil­lion of Se­ries 2018 revenue bonds. The deal is rated A2 by Moody’s In­vestors Ser­vice and A-plus by S&P Global. ◽

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