Municipals hold steady as market awaits largest deal of week; California Water brings offering

By Sheri Kasprzak

New York, Sept. 30 – Municipals were largely unmoved on the session Tuesday, despite weaker Treasuries, as the market awaited a $1.1 billion highway offering from the Texas Transportation Commission.

The triple-A rated deal will be welcome by investors, according to one sell-side source reached Tuesday afternoon.

“There will always be appetite for highly rated munis,” said the market insider.

“The size of the deal is appealing, that’s part of it, and the quality is going to attract a lot of interest.”

The source said he wouldn’t speculate on whether the deal would likely to be upsized.

The transportation commission is on tap to sell its highway improvement G.O. bonds through J.P. Morgan Securities LLC.

The bonds are due 2015 to 2036 with term bonds due in 2039 and 2044.

Proceeds will finance or reimburse the Texas Highway Fund for capital improvement projects.

California DWR deal prices

Leading Tuesday’s offerings, another significant deal came to market. The California Department of Water Resources priced $640.74 million of series AS Central Valley Project water system revenue bonds. The deal was increased from $625 million.

The bonds (Aa1/AAA/) were sold through senior managers Morgan Stanley & Co. LLC and Ramirez & Co. Inc.

The bonds are due 2018 to 2032 with 2% to 5% coupons, according to a pricing sheet.

Proceeds will be used to refund the department’s series AE through AN revenue bonds.

California greens trade

In other news out of the Golden State, California’s green various purpose G.O.s, which priced last week, were seen trading higher on Tuesday.

The 3% 2028s were seen late Tuesday at 3.088% after pricing at 3.15%.

The 3.75% 2037s were trading at 3.63% after pricing at 3.84% last Tuesday afternoon.

Chandler upsized deal

Elsewhere in primary action, the City of Chandler, Ariz., hit the market with $214.27 million of series 2014 general obligation refunding bonds. The deal was upsized from $194.64 million.

The bonds (/AAA/AAA) were sold through lead managers Wells Fargo Securities LLC and Morgan Stanley & Co. LLC.

The bonds are due 2015 to 2026 with a term bond due in 2028. The serial coupons range from 1.5% to 5%. The 2028 bonds have a 3.5% coupon priced at 104.167.

Proceeds will be used to refund the city’s series 2007 and 2009 G.O. bonds.

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