Municipals end busy day for primary on firm note; California brings $2.04 billion G.O. bonds

By Sheri Kasprzak

New York, Oct. 19 - Municipals firmed once again amid heavy primary action, said market insiders. Yields were down by 1 to 4 bps across the yield curve, with the most improvement seen in the middle.

Yields on 10-year munis were down by more than 4 bps. Thirty-year yields were down 3 bps and 20-year yields were down 2 bps.

The heavier primary volume dominated market activity, leaving the secondary somewhat more subdued than Tuesday, said one trader reached during the day.

"Loads going on in primary, but something to be desired in secondary," he noted.

The day's primary activity was led by two major offerings - one from the State of California and another from Hudson Yards Infrastructure Corp.

California sells G.O. debt

Heading up the day's very busy primary activity was a $2.04 billion sale of series 2011 general obligation bonds from the State of California.

The offering included $1.8 billion of series 2011 tax-exempt various purpose general obligation bonds and $205 million of series 2011 taxable G.O. bonds, said a pricing sheet from treasurer Bill Lockyer's office.

The tax-exempt bonds are due 2014 to 2029 with term bonds due in 2032 and 2041. The serial coupons range from 3% to 5.25%. The serial yields range from 1.33% to 4.58%. The 2032 bonds have a split maturity with a 4.625% coupon priced at 99.267 to yield 4.68% and a 5.25% coupon priced at 104.481 to yield 4.68%. The 2041 bonds have a 5% coupon priced at 99.50 to yield 5.032%.

The taxable bonds are due 2013 to 2016 with coupons from 2.125% to 3% and yields from 2.066% to 2.924%.

The bonds (A1/A-/A-) were sold through Goldman, Sachs & Co.

Retail investors took about $386.7 million of the tax-exempt bonds and $85.3 million of the taxables, making up 21.5% of the tax-exempts and 42.6% of the taxables. Retail investors took 23.6% of the total offering, said Tom Dresslar, spokesman for the treasurer's office.

"Given the market we confronted, we're satisfied with the results," Dresslar said in a statement.

"We're confident we got the best deal possible for taxpayers. Just as important, these bonds will finance critical improvements to California's infrastructure and create thousands of good-paying jobs in communities across our state."

Proceeds will be used to finance capital projects and refund G.O. debt with a mandatory tender date of April 2, 2012.

Hudson Yards brings $1 billion

Another major offering during the session came from Hudson Yards Infrastructure Corp. of New York, which sold $1 billion of series 2011 senior revenue bonds, said a pricing sheet.

The bonds (A2/A/A/) were sold through J.P. Morgan Securities LLC.

The offering includes $650 million of 5.75% bonds, $300 million of 5.25% bonds and $50 million of 5% bonds. The 5.75% bonds are priced to yield 5.1%, the 5.25% bonds are priced at par and the 5% bonds are also priced at par. All of the bonds are due in 2047.

Proceeds will be used to pay for the extension of the Number 7 subway line from its current terminus at Eighth Avenue to the Hudson Yards Redevelopment Area, as well as to pay for other infrastructure needs, including park development and other amenities.

Milwaukee prices $145 million

In other news, the City of Milwaukee priced $145 million of series 2011-M6 school revenue anticipation notes on Wednesday, said a pricing sheet.

The notes (MIG 1/SP-1+/F1+) were sold competitively with Wells Fargo Securities LLC winning the bid, said Craig Campbell with the city comptroller's office. The true interest cost came in at 0.198863%.

The notes are due June 27, 2012, and have a 1.5% coupon priced at 100.866.

Campbell said Wednesday that the city isn't officially required to sell its debt competitively but generally does so.

Proceeds will be used to fund school capital needs ahead of the collection of property taxes, state aid payments and federal aid payments.

Catholic Health West preps deal

Looking to upcoming offerings, Catholic Health Care West said that it will bring $476.02 million of series 2011 revenue bonds in two tranches.

The deal includes $349.89 million of series 2011A bonds through the California Health Facilities Financing Authority and $126.13 million of series 2011B bonds through the Arizona Health Facilities Authority.

J.P. Morgan Securities LLC is the senior manager for the bonds (/A/A+).

Proceeds will be used to finance and refinance capital projects at Catholic Health Care West facilities in California and Arizona.

Chicago Transit plans bonds

The Chicago Transit Authority is expected to price $455.75 million of series 2011 sales tax receipts revenue bonds, said a preliminary official statement.

The bonds (Aa3/AA/) will be sold on a negotiated basis with Wells Fargo Securities LLC and Morgan Stanley & Co. LLC as the senior managers.

The bonds are due 2021 to 2040.

Proceeds will be used to purchase rail cars and make other capital improvements approved by the CTA Board.

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