Munis mostly flat; $9 billion expected in week ahead; California brings $2.47 billion bonds

By Sheri Kasprzak

New York, March 15 - Municipal yields were mostly flat on Friday ahead of another large week for new offerings, market sources said.

About $9 billion of new deals await investors in the coming week, in contrast to about $8 billion of new offerings priced during the week just ended.

Yields were mostly flat as secondary action remained brisk, said one trader.

"There's not a lot of movement, but we are seeing a pretty decent amount of trading for a Friday," he said.

"We've seen some block trades from some of the larger bonds priced last week."

California brings G.O. bonds

Heading to the primary market, the State of California hit the market with its $2,471,690,000 of series 2013 general obligation bonds on Thursday.

The bonds (A1/A/A-) were sold through J.P. Morgan Securities LLC and Goldman Sachs & Co., said a pricing sheet.

The deal included $1,048,570,000 of series 2013A various-purpose G.O. bonds, $1,058,860,000 of series 2013B various-purpose G.O. refunding bonds and $364.26 million of series 2013C taxable various-purpose G.O. bonds.

The 2013A bonds are due 2014 and 2017 to 2020 with term bonds due in 2038 and 2043. The serial coupons range from 2% to 5%. The 2038 bonds have a 5% coupon priced at 109.773. The 2043 bonds have a split maturity with a 4% coupon priced at 97.777 and a 5% coupon priced at 108.916.

The 2013B bonds are due 2014 to 2033 with 2% to 5% coupons.

The 2013C bonds are due 2015 to 2016. The 2015 bonds have a 0.85% coupon and priced at 100.38, and the 2016 bonds have a 1.05% coupon and priced at 100.338.

The offering was a significant bellwether for Thursday's market tone, said Alan Schankel, managing director with Janney Montgomery Scott LLC.

"Initially priced as 4% to yield 3.68% in retail pricing, the par-ish structured 20-year maturity yield was adjusted 18 basis points higher to 3.84% while the 5% coupon yield required a 19 basis point increase to 3.57% for finalized pricing," Schankel said.

"The 30-year maturity started as 4% at 100 on Tuesday [in the first retail order period] but finalized 13 basis points higher at 4.13%."

Proceeds will be used to fund capital projects.

New York Transitional ahead

Heading up the week's primary action, the New York City Transitional Finance Authority is scheduled to price $1 billion of series 2013 future tax secured subordinated bonds on Wednesday through BofA Merrill Lynch, JPMorgan, Wells Fargo Securities LLC, Barclays and Morgan Stanley & Co. LLC.

The offering includes $650 million of series 2013F-1 tax-exempt bonds, $100 million of series 2013F-2 taxable qualified school construction bonds, $229 million of series 2013G tax-exempt bonds and $21 million of series 2013H taxable bonds.

Proceeds will be used to finance general city capital expenditures, including the rehabilitation or repair of public schools and land acquisition.

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