Municipals end touch cheaper as market awaits deals; U of California preps $950 million deal

By Sheri Kasprzak

New York, March 31 - High-grade municipals were seen somewhat cheaper on Monday amid light trading action, market sources reported, as issuers got their retail order periods under way.

A trader in the afternoon said municipal yields were cheaper in spots as the market waited for what will likely be another relatively subdued week for supply.

"From what I've seen, we'll have a bit more than last week, but supply will remain relatively light," the trader said.

Meanwhile, Treasuries closed the session mixed after comments from Federal Reserve chairwoman Janet Yellen indicated that interest rates might stay put due to a still-struggling jobs market. At the close, the five-year Treasury note yield, which is most sensitive to monetary policy, fell by 3 basis points to end the session at 1.718%. Meanwhile, the 30-year bond yield rose by a basis point to close at 3.558%, and the 10-year note yield was unchanged at 2.726%.

University offerings ahead

Looking to the week's new issues, the largest deal will come from the University of California, which is set to price $950 million of series AM-AN general revenue bonds (Aa2/AA/) through Wells Fargo Securities LLC, Goldman Sachs & Co. and Siebert Brandford Shank & Co. LLC. Pricing is expected for Thursday.

The offering includes $550 million of series AM tax-exempt bonds and $400 million of series AN taxable bonds.

Proceeds from the offering will be used to finance or refinance capital projects for some of the university's campuses.

Deal is one of a few

The offering is only one of a few university deals on the calendar for the week. The University of Texas System is set to price $270 million of series 2014A revenue financing system bonds, also on Thursday.

The bonds (Aaa/AAA/AAA) will be sold through Wells Fargo and Piper Jaffray & Co.

Proceeds will be used to finance capital projects for the university and to refinance commercial paper notes.

Also during the week, the Mississippi State University Educational Building Corp. will price $99.84 million of revenue bonds (Aa2//AA) through Morgan Stanley & Co. LLC and Raymond James/Morgan Keegan.

Proceeds from the two-tranche offering will be used to finance some improvements and capital expenditures, including the construction, furnishing and equipment of a classroom building with parking, as well as to current refund the corporation's series 2004A revenue bonds and to advance refund all or a portion of its series 2005 revenue bonds.

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