Munis little changed in quiet session; California gears up for $2 billion G.O. refunding bonds

By Sheri Kasprzak

New York, Feb. 27 - Traders called Monday's session relatively quiet, noting that trading activity was light and primary action was extremely slow.

"Everyone's sort of hanging back today waiting to see what's going to happen with pricings later on in the week," said one trader.

"I suspect it will be easier to get a firm read on the market tomorrow [Tuesday]."

Meanwhile, new-issue volume for the week ahead is expected to top $8 billion, according to Tom Kozlik, municipal credit analyst with Janney Montgomery Scott LLC. This outpaces the previous week's new offerings of about $5 billion. The action will be led by a $2 billion sale of series 2012 various purpose general obligation refunding bonds from the State of California, said Kozlik.

In political news, Kozlik reported Monday that New Jersey Gov. Chris Christie introduced a budget on Feb. 21 that counts on increasing tax revenue by 7.3%, the most since before the recession began.

"It also depends on the use of $288 million of reserves and increases reliance on one-time revenues to $1.6 billion," Kozlik wrote.

California preps sale

That California offering will be sold through senior managers Barclays Capital Inc., J.P. Morgan Securities LLC and Wells Fargo Securities LLC.

The proceeds of the bonds (A1/A-/A-) will be used to current refund G.O. bonds for a debt service savings.

Pricing is slated for Thursday, according to a sales calendar.

The offering is one of several larger deals expected to come out of the Golden State during the week.

On Tuesday, the California Department of Water Resources is slated to bring $350 million of Central Valley project water system revenue bonds (Aa1/AAA/) through BMO Capital Markets LLC.

The offering includes $40 million of series AK bonds, $110 million of series AL bonds and $200 million of series AM bonds.

Proceeds will be used to refund the department's series 2002X and 2005AC revenue bonds.

Coming up during the week, the California Health Facilities Financing Authority is expected to price $215.24 million of series 2012 revenue bonds for the Lucile Salter Packard Children's Hospital.

The bonds (Aa3/AA/AA) will be sold through Morgan Stanley & Co. LLC, and proceeds from the sale will be used to finance construction projects at the hospital and refund its series 2003C revenue bonds.

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