Municipal yields soften as supply slows; California Public Works Board sells $599 million

By Sheri Kasprzak

New York, Oct. 19 - Municipal yields were a touch off again on Friday amid lethargic secondary action, market insiders reported.

"We're a touch off, maybe a basis point or so, outside of 10 years," said a trader reached late in the afternoon.

Treasuries, meanwhile, shook off weakness seen earlier in the week.

Meanwhile, the week ahead will feature almost $7.5 billion in new offerings, including a $1.5 billion sale of taxable bonds from the Catholic Health Initiatives.

The health care system will sell the bonds through J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC.

Catholic Health intends to use the proceeds to finance mergers, acquisitions and joint ventures as CHI creates new partnerships. News of the offering comes along with word that subsidiary Catholic Health East will merge with Trinity Health.

"CHI, with $10 billion in annual revenue, operates 74 hospitals in 19 states, placing it among the top five health care systems by revenue in the country," said Alan Schankel, managing director with Janney Montgomery Scott LLC.

California public works eyed

In the week's primary action, the California State Public Works Board sold $599,165,000 of series 2012 lease revenue bonds, according to a pricing sheet.

The deal included $457,195,000 of series 2012G various capital projects lease revenue bonds, $55,735,000 of series 2012H Department of Education Riverside Campus projects lease revenue bonds, $65,485,000 of series 2012I Department of Corrections and Rehabilitation California State Prison lease revenue refunding bonds and $20.75 million of series 2012J Department of Public Health Richmond Laboratory project lease revenue refunding bonds.

The 2012G bonds are due 2015 to 2032 with a term bond due in 2037. The serial coupons range from 4% to 5%. The 2037 bonds have a 5% coupon priced at 108.52.

The 2012H bonds are due 2016 to 2032 with a term bond due in 2037. The serial coupons range from 3% to 5%. The 2037 bonds have a 4% coupon priced at 98.463.

The 2012I bonds are due 2015 to 2018 with 5% coupons.

The 2012J bonds are due 2013 to 2015 with 2% to 4% coupons.

The bonds (A2/BBB+/BBB+) were sold through senior managers Loop Capital Markets LLC and Stone & Youngberg.

Proceeds will be used to construct, equip, acquire and renovate a correctional facility, courthouses, toxic substances treatment plants; renovate the California School for the Deaf in Riverside; and refund existing lease revenue bonds.

William Paterson sells bonds

Elsewhere, the New Jersey Educational Facilities Authority priced $51,105,000 of series 2012 revenue and refunding bonds for William Paterson University, according to a pricing sheet.

The offering included $33,815,000 of series 2012C revenue bonds and $17.29 million of series 2012D revenue refunding bonds.

The 2012C bonds are due 2013 to 2034 with term bonds due in 2038 and 2042. The serial coupons range from 2% to 5%. The 2038 bonds have a 3.5% coupon priced at 99.158, and the 2042 bonds have a 3.5% coupon priced at 98.5.

The 2012D bonds are due 2013 and 2015 to 2028 with 2% to 5% coupons.

The bonds (A1//AA-) were sold competitively. Citigroup Global Markets Inc. won the bid for both tranches, said Sheryl Stitt, director of public communications for the authority. The all-in true interest cost was 2.9554027%.

"Total combined net present value savings for the university as the beneficiary is $4,582,402.36," said Stitt Friday.

Proceeds will be used to refund the university's series 2002E and 2004A revenue bonds, as well as to make capital improvements to university facilities.

California readies G.O. deal

Another major offering in the week ahead comes from the State of California, which is preparing to price $549.8 million of series 2012 various-purpose G.O. refunding bonds (A1/A-/A-).

The bonds will price competitively on Tuesday.

Proceeds will be used to current and advance refund some of the state's G.O. bonds.

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