Munis end mixed despite Treasury rally; Riverside County offers $250 million short-term notes

By Sheri Kasprzak

New York, June 6 - Municipal yields closed mixed on Thursday even though Treasuries rallied late in the session, traders reported.

It's been a tough week for municipals, and with the remainder of the week's primary deals pricing Thursday, yields struggled in spots, said traders.

Municipals continue to underperform Treasuries, with municipal-to-Treasury ratios climbing north of 104% for both 10- and 30-year bonds.

The morning started off strong, said one trader, but as the day progressed, yields climbed in places even as Treasuries rallied in the afternoon.

Municipal mutual funds experienced outflows last week, according to the Investment Company Institute, with $216 million of outflows reported.

State tax revenues grow

According to the Rockefeller Institute, state revenues grew substantially in the first quarter, the 13th consecutive quarter of growth following the recession.

The institute reported that there was a 9.3% increase in tax collections. California's 52% jump in personal income tax collections and 28% increase in sales tax revenues skew the results, said Alan Schankel, managing director with Janney Montgomery Scott LLC. Those increases are largely the result of recent, temporary tax increases, Schankel said.

Riverside brings TRANs

Heading up the day's note offerings, Riverside County, Calif., hit the market with $250 million of series 2013-14 tax and revenue anticipation notes, said a pricing sheet.

The deal included $125 million of series 2013-14A notes and $125 million of series 2013-14B notes.

The 2013-14A notes are due March 31, 2014, have a 2% coupon and priced at 101.378 to yield 0.16%.

The 2013-14B notes are due June 30, 2014, have a 2% coupon and priced at 101.811 to yield 0.18%.

The notes (//F1+) were sold through lead manager Citigroup Global Markets Inc.

Proceeds will be used to fund the ongoing operations of the county and the county's prepayment to the California Public Employees' Retirement System.

Houston offering ahead

Looking ahead, the City of Houston is expected to come to market on Wednesday with $180 million of series 2013 tax and revenue anticipation notes (/SP-1+/F1+).

The notes will be sold competitively and are due June 30, 2014.

Proceeds will be used to finance capital needs for the city ahead of the collection of certain taxes and revenues.

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