Municipals improve with active secondary; California Public Works prices $795.23 million

By Sheri Kasprzak

New York, March 26 - Municipals were better again on Wednesday as secondary activity picked up and new offerings were well-received, market sources said.

"There's a lot of trading activity out there today," said a trader.

"We are seeing a firmer tone. Most of the new issues coming are coming in strong."

Municipal yields were seen lower by 3 basis points to 5 bps, said the trader in the afternoon.

Treasuries also helped municipals, getting a boost from the auction of $35 billion of five-year Treasury notes. At close, the five-year note yield, which has been particularly volatile in recent sessions due to interest rate talks, fell by 4.5 bps to close at 1.677%, and the 10-year note yield fell by 3.5 bps to 2.701%. The 30-year bond yield fell by 3 bps to 3.549%.

Atlanta offers debt

Heading up Wednesday's primary activity, the City of Atlanta hit the market with $852,805,000 of series 2014 general revenue bonds - a deal that was upsized from $705.57 million.

The deal included $523,605,000 of series 2014A non-AMT passenger facility charge and subordinate-lien general revenue refunding bonds, $144.14 million of series 2014B non-AMT airport general revenue refunding bonds and $185.06 million of series 2014C AMT airport general revenue refunding bonds, according to a pricing sheet.

The 2014A bonds are due 2024 to 2034 with 4% to 5% coupons.

The 2014B bonds are due 2017 to 2033 with coupons from 3% to 5%.

The 2014C bonds are due 2015 to 2030 with coupons from 2% to 5%.

The bonds were sold through lead managers Siebert Brandford Shank & Co. LLC and SunTrust Robinson Humphrey Inc.

Proceeds will be used to refund the airport's series 2004B, 2004C and 2004J general revenue bonds.

Public Works bonds price

Another major offering for the week priced Wednesday. The California State Public Works Board offered $795.23 million of series 2014A Department of Corrections and Rehabilitation lease revenue bonds.

The bonds (A2/A-/A-) were sold through Morgan Stanley & Co. LLC and Wells Fargo Securities LLC.

The bonds are due 2017 to 2035 with a term bond due in 2039, according to a pricing sheet. The serial coupons range from 2% to 5%. The 2039 bonds have a 4.5% coupon priced at 99.546 and a 5% coupon priced at 105.306.

Proceeds will be used to finance the construction of the Mule Creek State Prison and the Richard J. Donovan Correctional Facility.

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