Second session of losses as most of week's supply closes; New Jersey environmental prices

By Sheri Kasprzak

New York, Aug. 15 - Municipal yields posted losses for the second-straight session, as the week's supply dwindled and Treasuries took another hit, market sources reported.

"We're down again with Treasuries," said a trader reached in the afternoon.

"Technicals are still good. New issues are pricing very well, but we're having some trouble from Treasuries. There's also a supply imbalance. Demand is still strong, but the volume we're getting this week is pretty light."

Meanwhile, the market awaits a major offering on Thursday out of California. The Golden State is set to price $10 billion of short-term notes.

Initial yields from 0.3% to 0.55%

During a two-day retail order period, the California series 2012-2013 revenue anticipation notes (MIG 1/SP-1+/F1) saw price talk of 0.30% to 0.40% for the May 2013 maturity and 0.40% to 0.55% yields for the June 2013 notes, said Alan Schankel, managing director with Janney Montgomery Scott LLC.

"The notes carry top ratings of MIG 1 and SP-1+ from Moody's and [Standard & Poor's], while the F1 Fitch rating is in penultimate territory," Schankel wrote Wednesday.

"California's sale follows the release of July cash reports that tax receipts are running 10% behind FY13 budget."

The California notes will be sold through senior managers J.P. Morgan Securities LLC, Wells Fargo Securities LLC and De La Rosa & Co.

The state intends to use the proceeds to assist in cash management for the state's 2012-2013 fiscal year.

New Jersey environmental bonds price

Leading Wednesday's primary action, the New Jersey Environmental Infrastructure Trust brought to market $211,165,000 of series 2012 environmental infrastructure refunding bonds, said a term sheet.

The offering included $200.9 million of series 2012A-R bonds, $1,255,000 of series 2012B-R bonds and $9.01 million of series 2012C-R bonds.

The 2012A-R bonds are due 2013 to 2026 with 3% to 4% coupons. The 2012B-R bonds are due 2013 to 2021 with 3% coupons. The 2012C-R bonds are due 2013 to 2023 with 3% to 4% coupons.

The bonds (Aaa/AAA/AAA) were sold competitively. Bank of America Merrill Lynch won the series 2012A-R bonds and Janney Montgomery Scott LLC won the series 2012B-R and 2012C-R bonds, said David Zimmer, the trust's executive director.

Proceeds will be used to refund outstanding bonds.

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