Muni yields close out rough week higher still; California hits market with two major offerings

By Sheri Kasprzak

New York, Nov. 12 - Municipal yields continued to rise on Friday. Yields were seen up 3 to 5 basis points across the curve, traders reported.

One trader said that although long bonds are still taking the brunt of the abuse, shorter bonds were up as much as 3 bps on the day. Factoring in the 12 bps jump in long bonds during a single day during the week, long bond yields were up by over 20 bps on the week.

The trader reported that secondary activity was a little better, and moderate action was seen during the session Friday.

Amid the trades, the Los Angeles County Public Works Finance Authority's recently priced taxable bonds were seen moving. The 6.841% 2025 bonds were seen Friday at 6.624% after pricing Tuesday at par.

California hits market

Primary action for the week ahead will continue the recent streak of massive supply. Two major deals from the State of California will headline the coming calendar, including a $10 billion sale of series 2010-2011 revenue anticipation notes scheduled to price on Wednesday.

Those notes (MIG 1/SP-1/F2) will be sold through J.P. Morgan Securities LLC and are due in 2011.

Proceeds will be used to help the state plug up a cash flow deficit.

Just a day later, the state will come to market again, this time with $2 billion of series 2010 various-purpose general obligation bonds (A1/A-/) offered through Citigroup Global Markets Inc.

The state plans to use the proceeds from that sale to finance capital expenditures statewide.

Texas sale planned

Another major offering comes out of the Lone Star State. Texas is poised to bring $1.238 billion of series 2010A unemployment compensation obligation assessment revenue bonds on Thursday, said a sales calendar.

The bonds (Aa1/AAA/AA+) will be sold on a negotiated basis with Bank of America Merrill Lynch and Citigroup as the senior managers.

The bonds are due 2011 to 2018.

Proceeds will be used to repay principal and interest on advances from the federal unemployment trust fund and to fund current unemployment benefits.

Houston preps deals

Also out of Texas, the City of Houston is scheduled to sell $498 million of series 2010 public improvement refunding bonds Tuesday, said a preliminary official statement and calendar.

The deal includes series 2010A refunding bonds, series 2010B Build America Bonds and series 2010C taxable bonds, but the exact breakdown was unavailable Friday.

The bonds (/AA/AA) will be sold through Jefferies & Co.

Proceeds will be used to refund the city's series 2010A-C commercial paper notes.

MTA deal ahead

Looking out on the horizon, the Metropolitan Transportation Authority of New York City is expected to sell $1 billion of series 2010 transportation revenue bonds on Nov. 23, said a sales calendar.

The bonds (A2/A/A+) will be sold through Citigroup.

The bonds will be offered in two tranches, but the exact breakdown was not immediately available.

One tranche is due 2011 to 2019, and the other is due from 2011 to 2022.

Proceeds will be used to pay holders of the CP-1 transportation revenue notes.

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