Municipal yields close cheaper in spots ahead of $9.6 billion of new issues expected for week

By Sheri Kasprzak

New York, March 11 - Muni yields were flat to cheaper in spots on Monday, market insiders reported.

With a few large deals conducting their retail order periods, yields were seen weaker in places, particularly outside of 10 years, said traders.

"There's not a lot of movement," one trader said, "but I'm sure a lot of folks are seeing how some of the larger deals do with retail. There's less focus on secondary, which has been really quiet today, and more on what's going on in primary."

Although demand had been very solid for the past several weeks, that might be changing, said Tom Kozlik, municipal credit analyst with Janney Montgomery Scott LLC.

"After eight weeks of positive flows, Lipper reported $97 million of outflows from municipal bond mutual funds in the week ending March 6," Kozlik said.

California deal set

About $9.6 billion of new issues are coming up during the week.

Heading up that primary action, the State of California plans to sell $2.4 billion of series 2013 general obligation bonds on Thursday.

The bonds (A1/A/A-) will be sold through J.P. Morgan Securities LLC and Goldman Sachs & Co.

The deal includes $1.09 billion of series 2013A various purpose G.O. bonds, $1 billion of series 2013B various purpose G.O. refunding bonds and $310 million of series 2013C taxable various purpose G.O. bonds.

Proceeds from the sale will be used to fund capital projects.

New York Urban Development ahead

Another major offering during the week comes from the New York State Urban Development Corp., which plans to price $827.55 million of series 2013 general purpose state income tax revenue bonds in three tranches.

The deal includes $556,695,000 of series 2013A-1 bonds, which are due 2019 to 2043, $68,975,000 of series 2013A-2 bonds, which are due 2014 to 2026, and $201.88 million of series 2013B taxable bonds, which are due 2014 to 2019.

Wells Fargo Securities LLC and RBC Capital Markets LLC are the senior managers.

Proceeds will be used to finance economic development projects.

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