Billions price, large inflows reported, benchmarks steady

BY SourceMedia | CORPORATE | 11/17/21 04:04 PM EST By Lynne Funk

The primary municipal bond market led the secondary Wednesday with two billion-plus deals and a diversity of exempt, taxable and green or social bonds being repriced to lower yields while U.S. Treasuries were better on the day with the 30-year dipping below 2% and equities losing ground.

Triple-A municipal benchmark yields were little changed. Ratios held in a range Wednesday with the municipal-to-Treasury ratios at 50% in five years, at 69% in 10 years and 78% in 30 years, according to Refinitiv MMD's 3 p.m. read. ICE Data Services had the five-year at 50%, the 10 at 71% and the 30 at 78%.

The Investment Company Institute reported $1.608 billion of inflows into municipal bond mutual funds for the week ending Nov. 10, up from $657 million a week prior, marking the 36th consecutive week of inflows and bringing the total for the year to more than $80 billion.

Exchange-traded funds saw another high week with ICI reporting $751 million of inflows, down from $828 million of inflows a week prior.

Returns are still in positive territory with the Bloomberg Fixed Income Indices showing investment grades up 0.52% in November and 1.02% on the year, high-yield at positive 0.94% for the month and 7.09% on the year while taxables have lost 0.64% in November and positive 0.25% in 2021.

It was all about the primary Wednesday, though, and investors had quite the selection of credits.

BofA Securities priced for the San Diego County Regional Airport Authority (A2//A+/) $1.587 billion of tax-exempt non-AMT and private activity AMT subordinate airport revenue bonds.

The first $490.68 million of non-AMT bonds, saw 5s of 7/2026 at 0.64%, 5s of 2031 at 1.25%, 4s of 2036 at 1.68%, 4s of 2041 at 1.86%, 4s of 2041 at 2.00%, 5s of 2051 at 1.94%, 4s of 2051 at 2.09%, 5s of 2056 at 2.06%, and 4s of 2056 at 2.22%, callable in 7/1/2031.

The second, $1.096 billion of AMT PABs, saw 5s of 7/2026 at 0.87%, 5s of 2031 at 1.57%, 4s of 2036 at 1.93%, 4s of 2041 at 2.09%, 4s of 2046 at 2.23%, 5s of 2046 at 2.09%, 4s of 2051 at 2.33%, 5s of 2051 at 2.17%, 4s of 2056 at 2.46% and 5s of 2056 at 2.28%, callable in 7/1/2031.

Barclays Capital Inc. priced and repriced for the California Health Facilities Financing Authority (Aa3/AA-/AA-/) $1.033 billion of Cedars-Sinai Health System revenue bonds with bumps: 4s of 8/2037 at 1.69% (-5), 5s of 2041 at 1.71%, 4s of 2048 at 2.05% (-3), 3s of 2051 at 2.52% (-3) and 5s of 2051 at 1.91%, callable in 8/15/2031.

Goldman, Sachs & Co. priced for the California Community Choice Financing Authority (A2///) $602.655 million of clean energy project revenue bonds, Climate Bond Initiative certified, Kestrel Verifiers. Bonds in 12/2023 with a 4% coupon yield 0.54%, 4s of 2026 at 1.12%, and 4s of 2052 with a mandatory tender on 12/1/2027, at 1.48%.

Loop Capital Markets priced and repriced for Cook County, Illinois, (A2/A+/AA-/) $191 million of general obligation refunding bonds with big bumps, with 4s of 11/2022 at 0.21% (-12), 4s of 2026 at 0.88% (-10), and 4s of 2028 at 1.25% (-10) and 2s of 2028 at 1.25%, noncall.

Loop Capital Markets also priced $57.52 million of taxables, priced at par at 0.606% in 11/2022, 1.741% in 2026 and 1.941% in 2027, noncall.

Citigroup Global Markets Inc. priced for the Tennessee Housing Development Agency (Aa1/AA+//) $170 million of residential finance program bonds, consisting of $90.82 million of non-AMT social bonds, priced at par: 0.20% in 7/2022, 0.80% in 1/2026, 0.90% in 7/2026, 1.80% in 1/2031, 1.85% in 7/2031, 2.10% in 7/2036, 2.30% in 7/2041, 2.55% in 7/2046, 2.60% in 7/2051 and 1.33% with a 3% coupon in 7/2052, PAC bonds. The second series, $79.18 million of non-AMT bonds, priced at par at 0.70% in 7/2022, callable in 4/1/2022.

Goldman Sachs & Co. LLC priced for Clark University, Massachusetts, (A2///) $155.2 million of taxable refunding bonds, priced at par at 2.613% in 7/2031, 3.113% in 2036, 3.216% in 2042 and 3.316% in 2052.

RBC Capital Markets priced for Colorado (Aa2/AA-//) $150.48 million of Building Excellent Schools Today certificates of participation, with one to 10 basis point bumps in a repricing: 5s of 3/2022 at 0.15% (-4), 5s of 2026 at 0.65% (-3), 5s of 2031 at 1.26% (-5), 4s of 2036 at 1.64%, 4s of 2041 at 1.81%, and 4s of 2046 at 2.01%, callable in 3/15/2031.

Huntington Securities, Inc. priced and repriced for Katy Independent School District, Texas, (Aaa/AAA//) $135.495 million of unlimited tax school building bonds, PSF guarantee, with one to 12 basis point bumps: 5s of 2/2022 at 0.11% (-5), 5s of 2026 at 0.66%, 5s of 2031 at 1.25%, 3s of 2036 at 1.59% (-10), 3s of 2041 at 1.78% (-12), 3s of 2046 at 2.03% (-8) and 3s of 2051 at 2.13% (-8), callable in 2/15/2031.

BofA Securities priced for the Housing Opportunities Commission of Montgomery County, Maryland, (Aaa///) $111.36 million of non-AMT and taxable multifamily housing development bonds: $104.245 million of non-AMT, priced at par: 0.80% in 7/2025, 1.90% in 1/2031, 1.95% in 7/2031, 2.20% in 7/2036, 2.40% in 7/2041, 2.60% in 7/2046 and 2.70% in 1/2051, callable in 7/1/2030; $7.115 million of taxables, priced at par: 1.67% in 7/2026 and 2.27% in 1/2030.

In the primary on Tuesday, J.P. Morgan Securities LLC priced for the Metropolitan Water Reclamation District of Greater Chicago (/AA/AAA/) $500 million of general obligation limited and unlimited tax, tax-exempt, green and taxable bonds: $112.485 million of taxable unlimited tax general obligation refunding bonds, priced at par: 12/2026 at 1.615%, 2032 at 2.534%, 2033 at 2.684%, callable in 12/1/2031; $45.845 million of taxable unlimited tax general obligation refunding bonds (alternative revenue source), priced at par: 12/2022 at 0.57%, 2026 at 1.615%, 2031 at 2.334%, 2036 at 2.984% and 2041 at 3.06%, callable in 12/1/2031; $113.935 million of general obligation limited tax capital improvement green bonds, with 5s of 12/2027 at 0.96%, 5s of 2031 at 1.39%, 5s of 2038 at 1.63%, 5s of 2041 at 1.72%, 4s of 2046 at 2.03%, and 4s of 2051 at 2.08%, callable in 12/1/2031; $30 million of general obligation unlimited tax capital improvement green bonds, with 5s of 12/2033 at 1.43%, 5s of 2035 at1.50% and 5s of 2036 at 1.52%, callable in 12/1/2031; $166.18 million of general obligation limited tax refunding bonds, with 5s of 12/2022 at 0.21%, 5s of 2026 at 0.79%, 5s of 2031 at 1.39% and 5s of 2032 at 1.42%, callable in 12/1/2031; and $31.555 million of general obligation unlimited tax refunding bonds, with 5s of 12/2029 at 1.21% and 5s of 2031 at 1.35%, noncall.

Informa (IFPJF): Money market muni funds fall
Tax-exempt municipal money market fund assets fell by $151.1 million, bringing their total down to $87.67 billion for the week ending Nov. 16, according to the Money Fund Report, a publication of Informa Financial Intelligence.

The average seven-day simple yield for the 150 tax-free and municipal money-market funds sat at 0.01%, the same as the previous week.

Taxable money-fund assets lost $3.55 billion, bringing total net assets to $4.432 trillion. The average, seven-day simple yield for the 782 taxable reporting funds sat at 0.02%, same as the prior week.

Secondary trading
Washington COPs 5s of 2022 at 0.23%. Maryland 5s of 2023 at 0.26% versus 0.27% Tuesday. Georgia 5s of 2023 at 0.24% versus 0.26% Tuesday. Prince George's County 5s of 2023 at 0.25% versus 0.27% Tuesday.

North Carolina 5s of 2024 at 0.32% versus 0.33% Tuesday. Maryland 5s of 2024 at 0.38%. Wisconsin 5s of 2024 at 0.42% versus 0.43% Tuesday. California 5s of 2025 at 0.52%. Charlotte, North Carolina 5s of 2026 at 0.61%-0.59% versus 0.60% original.

Charlotte 5s of 2030 at 1.08% versus 1.03% original. Maryland 5s of 2030 at 1.11%. New York City waters 5s of 2031 at 1.16%.

Los Angeles DWP 5s of 2036 at 1.30%. Metropolitan Water District of Southern California 5s of 2038 at 1.31%.

Washington 5s of 2042 at 1.59%-1.58%. Dallas waters 3s of 2050 at 2.09%-1.98%.

AAA scales
According to Refinitiv MMD, the one-year was steady at 0.15% in 2022 and at 0.25% in 2023. The 10-year sat at 1.11% and at 1.56% in 30.

The ICE municipal yield curve showed yields steady at 0.19% in 2022 and at 0.28% in 2023. The 10-year maturity sat at 1.11% and the 30-year yield was unchanged at 1.59%.

The IHS Markit (INFO) municipal analytics curve showed short yields steady at 0.17% in 2022 and at 0.25% in 2023. The 10-year yield was steady at 1.08% and the 30-year yield also steady at 1.56%.

The Bloomberg BVAL curve was unchanged at 0.17% in 2022 and 0.23% in 2023. The 10-year yield sat at 1.11% and the 30-year yield steady at 1.58%.

Treasuries were better and equities saw losses.

The five-year UST was yielding 1.229%, the 10-year at yielding 1.590%, the 20-year at 2.024% and the 30-year Treasury was yielding 1.980% near the close. The Dow Jones Industrial Average lost 211 points or 0.58%, the S&P was down 0.26% while the Nasdaq fell 0.33% near the close.

Primary to come
Mississippi (Aa2/AA/AA/) is set to price $1.225 billion of general obligation bonds, consisting of $198.85 million of tax-exempt GOs, $126.89 million of taxable GOs, and $900 million of taxable refunding GOs. Wells Fargo Corporate & Investment Banking.

Grand Canyon University (Ba1///) is set to price on Thursday $1.2 billion of taxable corporate CUSIP bonds. Barclays Capital Inc.

Georgia Tech Foundation is set to price on Thursday $100 million of taxable corporate CUSIP bonds, term 2051, indications of interest on Wednesday. Barclays Capital Inc.

Competitive
The San Francisco Public Utilities Commission (Aa2/AA//) is set to sell $216.825 million of wastewater revenue green notes at 10 a.m. Eastern time on Thursday.

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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