Munis close flat to firmer; California finalizes deal; February volume outpaces February 2011

By Sheri Kasprzak

New York, March 1 - Municipals closed out another session mostly unchanged to slightly firmer in the intermediate portion of the yield curve, said a trader.

The 10- to 20-year portion of the curve was once again firmer by 1 to 2 basis points, said one trader.

"Intermediate bonds seem to be faring the best," he said in the afternoon.

"Everything else is basically flat. I would have called it mixed a bit earlier in the day, but short and long bonds are really pretty flat at this point."

Meanwhile, the largest offering of the week, a $1.99 billion sale of general obligation bonds from the State of California, finalized after a two-day retail order period.

In broad muni news, the week's new-issue slate has done well, said Alan Schankel, managing director with Janney Montgomery Scott LLC. Yield increases of only about a basis point or so in longer maturities were seen for the new issues, he noted.

"The outperformance drove muni-to-Treasury ratios to the lowest in five days, with the 10-year ratio at 93% and 30-year at 104%," he said.

The coming week's new-issue calendar is expected to about $4.5 billion.

"Municipal mutual fund flows for the week ended Feb. 22 were positive for the 26th straight week at $1.4 billion," he said.

February volume up 44%

There was $23.8 billion of new issue volume in February, Schankel announced Thursday, outpacing February 2011's volume by 44%.

"Particularly noteworthy is the portion attributable to refundings, as issuers lock in low rates, refinancing 2002 vintage debt approaching its 10-year redemption date," Schankel wrote.

"Considering lower levels of borrowing for capital projects, however, new-money issuance for the year is actually 6.6% below the same period last year, comprising only 42% of 2012 issuance, compared to 52% last year and about 57% average for the aught decade."

California sells $1.99 billion

Leading the day's primary action, California finalized the pricing terms of its $1.99 billion of series 2012 various purpose general obligation bonds, said Tom Dresslar, spokesman for the state treasurer's office.

The bonds (A1/A-/A-) were sold through senior managers Barclays Capital Inc., J.P. Morgan Securities LLC and Wells Fargo Securities LLC.

The bonds are due 2013 to 2033 with a term bond due in 2038. The serial coupons range from 2% to 5.25%. The 2038 bonds have a split maturity with a 4.375% coupon priced at par and a 5% coupon priced at 107.005 to yield 4.13%.

Proceeds will be used to current refund existing G.O. bonds for a debt service savings. The final savings should be available on Friday, Dresslar said.

Retail investors, Dresslar said, took $930.7 million of the bonds, or 46.8% of the total offering.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.