Chicago BOE back in market with GOs

BY SourceMedia | MUNICIPAL | 11/16/17 07:15 PM EST By Chip Barnett

The Chicago Board of Education makes a second run at the primary market on Thursday as it returns to offer $857 million of general obligation bonds to muni buyers.

Secondary market
U.S. Treasuries were weaker on Thursday. The yield on the two-year Treasury rose to 1.70% from 1.68% on Wednesday, the 10-year Treasury yield gained to 2.35% from 2.33% and the yield on the 30-year Treasury increased to 2.79% from 2.78%.

Top-rated municipal bonds finished stronger on Wednesday. The yield on the 10-year benchmark muni general obligation fell one basis point to 1.99% from 2.00% on Tuesday, while the 30-year GO yield dropped two basis points to 2.68% from 2.70%, according to the final read of Municipal Market Data’s triple-A scale.

On Wednesday, the 10-year muni-to-Treasury ratio was calculated at 85.3% compared with 84.1% on Tuesday, while the 30-year muni-to-Treasury ratio stood at 96.4% versus 95.3%, according to MMD.

AP-MBIS 10-year muni at 2.274%, 30-year at 2.791%
The Associated Press-MBIS municipal non-callable 5% GO benchmark scale was stronger in early trade.

The 10-year muni benchmark yield dropped to 2.274% on Thursday from the final read of 2.295% on Wednesday, according to Municipal Bond Information Services, a national consortium of municipal interdealer brokers. The AP-MBIS 30-year benchmark muni yield declined to 2.791% from 2.799%.

The AP-MBIS benchmark index is a yield curve built on market data aggregated from MBIS member firms and is updated hourly on the Bond Buyer Data Workstation.

MSRB: Previous session's activity
The Municipal Securities Rulemaking Board reported 43,957 trades on Wednesday on volume of $14.85 billion.

Primary market
JPMorgan Securities is set to price the Chicago BOE's $857.43 million Series 2017 unlimited tax dedicated revenue general obligation bonds. This series of bonds is rated B by S&P Global Ratings, BB-minus by Fitch Ratings and BBB by Kroll Bond Rating Agency.

On Wednesday, JPMorgan (JPM) priced the BOE’s $64.9 million Series 2017 dedicated capital improvement tax bonds. That series is rated A by Fitch Ratings and BBB by Kroll.

Since 2007, the BOE has sold about $8.36 billion of debt, with the most issuance occurring in 2016 when it issued $1.93 billion of bonds. The board did not come to market in 2014.

Citigroup (C) is expected to price the South Jersey Port Corp.’s $255 million of Series 2017A and B subordinated marine terminal revenue bonds consisting of AMT and non-AMT bonds. The deal is rated Baa1 by Moody’s Investors Service.

In the competitive arena, Dallas is selling $302.85 million of Series 2017 GO refunding and improvement bonds. The deal is rated AA-minus by S&P and AA by Fitch.

Charleston County, S.C., is selling $103.18 million of Series 2017A GO capital improvement bonds. The deal is rated triple-A by Moody’s, S&P and Fitch.

Bond Buyer reports 30-day visible supply
The Bond Buyer's 30-day visible supply calendar decreased $808.7 million to $6.99 billion on Thursday. The total is comprised of $1.71 billion of competitive sales and $5.28 billion of negotiated deals.

Tax-exempt money market funds see outflows
Tax-exempt money market funds experienced outflows of $39.4 million, lowering total net assets to $129.20 billion in the week ended Nov. 13, according to The Money Fund Report, a service of iMoneyNet.com.

This followed an inflow of $1.03 billion to $129.24 billion in the previous week.

The average, seven-day simple yield for the 199 weekly reporting tax-exempt funds was unchanged from 0.47% in the previous week.

The total net assets of the 834 weekly reporting taxable money funds increased $5.38 billion to $2.586 trillion in the week ended Nov. 14, after an inflow of $553.9 million to $2.581 trillion the week before.

The average, seven-day simple yield for the taxable money funds increased to 0.71% from 0.70% in the prior week.

Overall, the combined total net assets of the 1,033 weekly reporting money funds increased $5.34 billion to $2.715 trillion in the week ended Nov. 14, after inflows of $1.59 billion to $2.710 trillion in the prior week.

Data appearing in this article from Municipal Bond Information Services, including the AP-MBIS municipal bond index, is available on The Bond Buyer Data Workstation. Click here for a brief tour of the Workstation, or contact Vanessa Kim at 212-803-8474 for more information.

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

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