Munis mostly flat, USTs cheapen

Munis were little changed on Wednesday, as UST yields rose and equities ended lower.

Muni yields were bumped up to two basis points, depending on the curve, on the intermediate and long end. UST yields cheapened by three to five basis points.

Muni investors saw heavy redemptions on Monday, but they still have to sort through the uncertainty of the Iran war and the new Federal Reserve chair, said Pat Luby, head of municipal strategy at CreditSights.

On Tuesday, many new-issue deals saw "uncharacteristically large" bumps, Luby noted, which suggests much of the reinvestment money went into primary rather than secondary trading.

"A lot of retail investors are still very distracted by the stock market," he said. Unless an investor has money that "needs to be reinvested, there's probably not as much of a sense of urgency."

ICI data
The Investment Company Institute Wednesday reported inflows of $2.125 billion for the week ending May 27, following $1.941 billion of inflows the previous week. Inflows have topped $1 billion each of the past six weeks.

Exchange-traded funds saw inflows of $2.543 billion after $1.433 billion of inflows the week prior, per ICI data.

New-issue market
In the primary market Wednesday, Wells Fargo (WFC) priced for the Kentucky Bond Development Corp. (A3///) $415.63 million of University of Kentucky Central Utility Plant Project non-AMT senior revenue bonds, Series 2026A, with 5s of 4/2030 at 3.00%, 5s of 10/2030 at 3.03%, 5s of 4/2031 at 3.11%, 5s of 10/2031 at 3.14%, 5s of 4/2036 at 3.61%, 5s of 10/2036 at 3.66%, 5s of 10/2041 at 4.05%, 5.25s of 10/2046 at 4.47%, 5.25s of 10/2051 at 4.76%, 5.5s of 10/2056 at 4.80% and 5s of 2058 at 4.95%, callable 10/2036.

Goldman Sachs (GS) priced for the Missouri Health and Educational Facilities Authority (Aa2/AA//) $309.065 million of Children's Mercy Hospital health facilities revenue bonds, Series 2026A, with 5s of 5/2027 at 2.55%, 5s of 2031 at 2.90%, 5s of 2036 at 3.25%, 5s of 2041 at 3.73%, 5s of 2046 at 4.23%, 5.5s of 2051 at 4.45% and 5.5s of 2054 at 4.55%, callable 5/2036.

BofA Securities priced for the Shelby County Health, Educational and Housing Facility Board, Tennessee, (/A-/BBB+/) $298.42 million of Baptist Memorial Healthcare healthcare revenue refunding bonds. The first tranche, $100.43 million of Series 2026A bonds, saw 5s of 9/2032 at 3.31%, callable 6/2032.

The second tranche, $197.99 million of 2026B bonds, saw 5s of 9/2032 at 3.30%, 5s of 2036 at 3.59%, 5.25s of 2041 at 3.95% and 5s of 2046 at 4.47%, callable 9/2036.

In the competitive market, Maryland (/AAA/AAA/AAA/) sold $307.205 million of GOs to Morgan Stanley (MS), with 5s of 6/2029 at 2.44%, 5s of 2031 at 2.60% and 5s of 2034 at 2.82%, noncall.

The state also sold $260.87 million of GOs to Jefferies, with 5s of 6/2035 at 2.94%, 5s of 2036 at 3.03% and 5s of 2038 at 3.18%, callable 6/2036.

Lastly, Maryland sold $231.925 million of GOs to Morgan Stanley (MS), with 5s of 6/2039 at 3.30% and 5s of 2041 at 3.42%, callable 6/2036.