Yields edge up ahead of massive supply; California to dominate primary with $12 billion sales

By Sheri Kasprzak

New York, Nov. 15 - Municipals were weaker to kick off yet another week packed with new issues.

Yields were seen higher by a few basis points in spots across the yield curve, one trader reported Monday afternoon.

"Everyone's waiting to see how supply pans out this week and how it affects yields," he said. "It already looks pretty busy."

Meanwhile, yields in the middle or long portions of the curve have risen significantly over the past month, according to Tom Kozlik, municipal credit analyst with Janney Montgomery Scott LLC.

"Ten-year yields rose 28 [basis points] to 2.64%, while 20- and 30-year yields rose 40 bps to 3.76% and 43 bps to 4.2%, respectively, since the middle of October," Kozlik said Monday.

"The lame-duck session for Congress begins today, and Janney expects that the chances of the extension of the BABs subsidy to be at less than 50%."

California deals abound

California will take up most of the primary volume in just two offerings. Those two deals, however, total $12 billion.

First up, the state will sell $10 billion of series 2010-2011 revenue anticipation notes (MIG 1/SP-1/F2) on Wednesday through J.P. Morgan Securities LLC.

Those notes, which are due in 2011, will be used to fund the state's cash flow needs ahead of revenue collections.

The very next day, the state will bring $2 billion of series 2010 various-purpose general obligation bonds (A1/A-/) to fund capital expenditures.

The bonds will be sold through Citigroup Global Markets Inc.

Texas PFA deal planned

Coming up on Thursday, the Texas Public Finance Authority will vie for investor attention against those California G.O. bonds with its own $1.238 billion offering of series 2010A unemployment compensation obligation assessment revenue bonds (Aa1/AAA/AA+).

The bonds will be sold through Bank of America Merrill Lynch and Citigroup and are due 2011 to 2018.

Proceeds will be used to repay principal and interest on advances from the federal unemployment trust fund and to fund current unemployment benefits.

Dallas ISD sale set

Also out of the Lone Star State, the Dallas Independent School District is scheduled to price $871.1 million of series 2010C unlimited tax school building bonds Tuesday, said a notice of sale.

The bonds (Aa2/A+/AA) will be sold competitively with First Southwest Co. as the financial adviser.

The bonds are due 2021 to 2035.

Proceeds will be used to construct, equip, acquire, improve and renovate school buildings within the district.

Houston, we have a pricing

In other Texas news, the City of Houston plans to bring $498 million of series 2010 public improvement refunding bonds (/AA/AA) through Jefferies & Co.

The bonds will refund the city's series 2010A-C commercial paper notes.

The North Texas Tollway Authority, based in Dallas, is slated to come to market with $490.81 million of refunding bonds through Bank of America Merrill Lynch on Wednesday.

Those bonds (A2/A-/) are due 2017 to 2025 with term bonds due 2032, 2039 and 2043, and they will be used to refund the authority's series 1997A, 2008H-1, 2008J and 2008L-1 bonds.

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