Municipals climb as Treasuries strengthen; California State brings $1.04 billion revenue bonds

By Sheri Kasprzak

New York, July 15 – It was a more lively session for municipals, with yields on top-rated munis falling by as much as 3 basis points, market insiders said.

Munis underperformed Treasuries, which were boosted on talk that the federal funds rate could see at least one gradual hike before December. The 30-year Treasury bond yield fell by 7 bps, and the 10-year note yield fell by 5 bps.

Meanwhile, the week’s largest deal hit the market, but it was downsized, as were several offerings pricing Wednesday.

CSU prices bonds

California State University offered $1,043,110,000 of series 2015 systemwide revenue bonds. The deal was downsized from $1.1 billion.

The bonds (Aa2/AA-/) were sold through senior managers J.P. Morgan Securities LLC and Wells Fargo Securities LLC.

The offering included $1,013,755,000 of series 2015A bonds and $29,355,000 of series 2015B taxable bonds.

The 2015A bonds are due 2015 to 2038 with term bonds due in 2043 and 2047. The serial coupons range from 2% to 5%. The 2043 bonds have a 4% coupon that priced at 98.992 and a 5% coupon that priced at 111.804. The 2047 bonds have a 5% coupon and priced at 111.17.

The 2015B bonds are due 2016 to 2026 with a term bond due in 2035. The serial coupons range from 0.65% to 3.656%. The 2035 bonds have a 4.413% coupon and priced at par.

Proceeds will be used to construct, renovate, equip and improve university facilities and refund existing debt.

North Carolina agency prices

Elsewhere during the day, the North Carolina Eastern Municipal Power Agency hit the market with $419,375,000 of series 2015 taxable revenue bonds. This deal was downsized from $477.53 million.

The bonds were sold through BofA Merrill Lynch.

The bonds are due 2016 to 2025 with 1.085% to 4.058% coupons, which all priced at par.

Proceeds will be used to acquire, develop, renovate, improve and extend power generation and transmission facilities.

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