Municipals end session mixed as Treasuries slide; San Diego USD brings $264.38 million bonds

By Sheri Kasprzak

New York, April 1 - Municipals were seen somewhat weaker 10 years and out on Tuesday, market insiders said. Short bonds were seen firmer, a trader said during the afternoon.

Treasuries took a hit following some positive economic data, and municipals followed, at least outside of 10 years.

"Trading is actually pretty decent," a trader said during the afternoon.

"I think we're moving along with Treasuries for the most part, but there's a case for firmness on the short side."

Supply remains very light this week. About $5 billion of issuance is expected, led by a sizable offering from the University of California on Thursday.

"Despite a very manageable new issue calendar, the municipal market began the week with a weaker tone as MMA AAA indexes finished 1 and 2 bps higher in 10-year and 30-year maturities at 2.53% and 3.96%," Alan Schankel, managing director with Janney Montgomery Scott LLC, said Tuesday morning.

"Scheduled new issue volume this week is under $5 billion, continuing the 2014 trend of light issuance, with first-quarter new issuance 26% behind last year's total.

"A modest primary calendar generally leads to low secondary volume. MMA reports that based on MSRB data, March finished as the slowest secondary month going back to January 2007, and with the 30-day visible supply standing around $7 billion, we could see more of the same in April."

San Diego USD sells debt

Leading the day's primary action, the San Diego Unified School District of California hit the market with $264,375,264.15 of series 2014 general obligation bonds.

The deal included $15.09 million of election of 2008 series 2014F G.O. bonds, $50,000,264.15 of election of 2008 series 2014G G.O. bonds and $199,285,000 of series 2014R-3 G.O. refunding bonds, said a pricing sheet.

The 2014F bonds are due 2014 and 2016. The 2014 bonds have a 1% coupon and priced at 100.187, and the 2016 bonds have a 5% coupon and priced at 110.032.

The 2014G bonds are due 2031 to 2038 with 0% coupons.

The 2014R-3 bonds are due 2015 to 2025 with a term bond due in 2029. The serial coupons range from 2% to 5%. The 2029 bonds have a 5% coupon and priced at 113.219.

The bonds (Aa3/AA-/) were sold through Goldman Sachs & Co.

Proceeds will be used to repair and upgrade outdated school facilities and to refund the district's series 2003, 2004 and 2005 G.O. bonds.

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