Municipals close weaker; California brings $2.72 billion; two New Jersey Health issues price

By Sheri Kasprzak

New York, April 11 - Municipal yields were weaker on Thursday as the bulk of the week's new deals priced, market sources reported, with yields higher by 1 basis point to 4 bps.

Weaker Treasuries and some mounting supply pressure could be to blame for the weakening tone, said one trader.

"Demand is still good, but there's a bit of a backlog [of deals]," the trader said.

"We've got more than $10 billion this week, and there's no sign of slowing next week, so we expect some pressure."

California G.O. bonds price

The week's largest offering, a $2.72 billion general obligation deal from the State of California, saw pricing levels cheapen as the state offered the bonds to institutional investors.

The state priced $2,719,995,000 of series 2013 G.O. bonds, said a pricing sheet.

The deal includes $1.25 billion of series 2013 tax-exempt G.O. bonds and $1,469,995,000 of series 2013 tax-exempt refunding bonds.

The G.O. bonds are due 2013 and 2016 to 2022 with term bonds due in 2037 and 2043. The serial coupons range from 4% to 5%. The refunding bonds are due 2013 to 2033 with coupons from 2% to 5%.

The bonds (A1/A/A-) were sold through BofA Merrill Lynch.

Proceeds will be used to finance capital improvements and to refund debt.

Two New Jersey deals price

During the week, the New Jersey Health Care Facilities Financing Authority came to market with two offerings for psychiatric facilities including a $212.12 million offering of series 2013 lease revenue bonds for the Greystone Park Psychiatric Hospital and a $73.53 million offering of series 2013 Department of Human Services lease revenue bonds for Marlboro Psychiatric Hospital, said a pricing sheet.

The Greystone bonds (A1//A+) were sold competitively. RBC Capital Markets LLC won the bid for the 2013A bonds at a 3.74% true interest cost. Barclays took the series 2013B bonds at a 2.62% TIC.

The deal included $50.73 million of series 2013A Department of Administrative Services lease revenue bonds and $161.39 million of series 2013B lease revenue bonds.

The 2013A bonds are due 2029 to 2033 with 3.5% to 5% coupons.

The 2013B bonds are due 2013 to 2028 with 2% to 5% coupons.

Proceeds will be used to refund and defease all of the authority's outstanding series 2003 bonds and 2005 bonds and to finance the completion of the demolition and remediation of the psychiatric facilities at Greystone.

Marlboro bonds sold

The Marlboro bonds were also sold competitively. BofA Merrill Lynch won the bid at a 3.62% TIC, said Linda Hughes, communications specialist at the authority.

The bonds are due 2014 to 2033 with 3% to 5% coupons, said a pricing sheet.

Proceeds will be used to finance the demolition and remediation of the existing facilities at the Marlboro Psychiatric Hospital and the construction of group housing.

Hughes said Thursday that the authority's policy is to sell all bonds on a competitive basis.

"A negotiated sale or private placement will be conducted if it is determined that it would better serve the requirements of a particular financing," Hughes said.

"Many health-care financings are better served by the negotiated sale or private placement because the credit is complex or poor and usually not well-known to the market. The fact that these bonds are backed by a contract from the Department of Human Services ... lent itself to the competitive sale because New Jersey credit is well-known to the market and rated relatively highly."

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