Municipals end weaker as heavy new-issue slate prices; Maryland brings $882.7 million of G.O.s

By Sheri Kasprzak

New York, March 4 – Municipals were a touch softer at close Wednesday as investors were met with a huge slate of pricings led by California’s various purpose general obligation bonds, market sources said.

Triple-A munis were off by 3 to 6 basis points with the 30-year yield up 6 bps at 3.11% and the 10-year up 3 bps at 2.13%.

Meanwhile, Treasuries were mixed as the market awaits nonfarm payrolls numbers. The five-year Treasury note yield fell by 1 bp to 1.60%, the 30-year yield rose by 1 bp to 2.72%, and the 10-year note yield was flat.

Leading Wednesday’s primary action was California’s G.O. offering, which was announced at $1.9 billion. The full details of the offering were not immediately available, but coupons reportedly range from 1.5% to 5%.

Maryland sells debt

Heading up the day’s competitive calendar, Maryland hit the market with $882,695,000 of series 2015 state and local facilities G.O. bonds. The offering size was cut from $921,995,000.

The deal included $518 million of series 2015A bonds and $364,695,000 of series 2015B refunding bonds, according to a pricing sheet.

The bonds (Aaa/AAA/AAA) were sold competitively with BofA Merrill Lynch winning the 2015A bonds at a 2.65% true interest cost and Citigroup Global Markets Inc. taking the 2015B bonds at a 2.14% TIC.

The 2015A bonds are due 2018 to 2030 with 3% to 5% coupons.

The 2015B bonds are due 2020 to 2026 with 4% coupons.

Proceeds will be used to finance the acquisition of state facilities; to make capital grants to local governments for public schools, community colleges and jails and correctional facilities; to provide matching loans and grants to local governments, nonprofits and other entities for hospitals, cultural projects and other projects; and to refund outstanding G.O. debt.

The sale will save Maryland taxpayers almost $22 million in debt service costs, Maryland treasurer Nancy Kopp said in a statement.

U of California plans deal

Moving to upcoming deals, the University of California announced plans to price $2.8 billion of series 2015 revenue bonds.

The deal includes $1.22 billion of series 2015I limited project bonds, $440 million of series 2015J taxable limited project bonds, $770 million of series 2015AO general revenue bonds and $370 million of series 2015AP taxable bonds.

The limited project bonds (Aa3/AA-/AA-) will be offered through senior managers Barclays and Raymond James/Morgan Keegan.

The general revenue bonds (Aa2/AA/AA) will be sold through senior managers Barclays and Stifel, Nicolaus & Co.

Proceeds will be used to finance the construction, acquisition, equipment and improvement of university facilities at 10 campuses and to refund existing revenue debt.

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