More than $9 billion expected to price this week; largest deal is California's; munis tighten

By Cristal Cody

Tupelo, Miss., April 9 - A heavy primary calendar is expected in the municipal bond market for the week, according to bond sources.

The State of California intends to sell $1.3 billion of various purpose general obligation bonds, and the State of Connecticut plans to offer $555 million of G.O. bonds (Aa3/AA/AA) later in the week.

"It's going to be a big week with Cal[ifornia] coming and half of a billion from Connecticut," a bond source said. "There's a lot of supply. The calendar will test the market this week."

Deals totaled about $7 billion last week.

"It's very manageable," the source said. "Last week's deals were a little more lower quality. This week you've got some state G.O.s."

Municipal bonds traded tighter on Monday in line with gains in Treasuries.

"Definitely things are stronger after the weak employment numbers," a source said. "Benchmark yields were down 3 to 15 basis points."

The strongest improvement was seen in the 10-year muni bond range, where yields were down 15 bps.

The Labor Department said on Friday that jobs rose by 120,000 in March, less than the forecast of about 201,000.

California plans $1.3 billion

The week's largest sale is expected to be from California, which plans to sell $1.3 billion of various purpose G.O. bonds, according to the state treasurer's office.

The bonds (A1/A-/A-) will price in two tranches of G.O. bonds and G.O. refunding bonds through a negotiated sale on Thursday.

Citigroup Global Markets Inc., Bank of America Merrill Lynch and Morgan Stanley & Co. LLC are the lead managers. Fidelity Capital Markets is co-senior manager.

Proceeds will be used to fund construction projects and to current and advance refund some of the state's outstanding G.O. bonds for debt service savings.

During April, the state said it plans to offer up to $200 million of G.O. bonds that will bear variable interest rates to replace certain outstanding variable-rate demand bonds that are supported by letters of credit.

Connecticut plans $555 million

Connecticut intends to offer $555 million of G.O. bonds (Aa3/AA/AA), a bond source said on Monday.

According to a preliminary official statement, the deal includes $212.4 million of series 2012A bonds due 2013 through 2020, $259.6 million of series 2012B bonds due 2021 through 2032 and $83 million of series 2012A taxable G.O. bonds due 2013 through 2022.

Barclays Capital Inc. is the bookrunner of the negotiated sale.

The bonds are expected to price Wednesday.

Proceeds will be used to fund state projects.

Atlanta to price

Also coming up, the City of Atlanta intends to sell $491.75 million of airport general revenue bonds (A1/A+/A+), according to a preliminary official statement.

The deal includes $65.3 million of series 2012A bonds, $191,165,000 of series 2012B bonds and $235,285,000 of series 2012C bonds.

The three tranches have serial maturities from 2013 through 2032 and term bonds due 2037 and 2042.

Bank of America Merrill Lynch is the lead manager of the negotiated sale.

Proceeds will be used to finance or refinance the costs of projects at the Hartsfield-Jackson Atlanta International Airport and to refund and redeem all the amounts previously drawn and outstanding under the series 2010A-B commercial paper program.

Sacramento Municipal ahead

Another California deal is expected from the Sacramento Municipal Utility District, which intends to price $227.64 million of electric revenue refunding bonds (A1/A+/A+), according to a preliminary official statement.

The series 2012Y bonds have serial maturities from 2013 through 2033.

J.P. Morgan Securities LLC is the bookrunner. The co-managers are Barclays, Bank of America Merrill Lynch, BMO Capital Markets Corp., De La Rosa & Co., Morgan Stanley, M.R. Beal & Co., Ramirez & Co., Inc. and US Bancorp.

Proceeds will be used to refund all or a portion of the district's outstanding series 2002Q revenue refunding bonds, series 2003R revenue bonds and series 2004T revenue refunding bonds.

Denton ISD, Texas, to price

Also on the calendar, the Denton Independent School District in Denton County, Texas, plans to price $100,145,000 of unlimited tax refunding bonds, according to a preliminary official statement.

The series 2012B bonds (/AAA/AAA) are due Aug. 15, 2012 and have serial maturities from 2015 through 2033.

Raymond James & Associates, Inc./Morgan Keegan and J.P. Morgan Securities LLC are the lead managers. The co-managers are Piper Jaffray & Co./First Public, LLC and Wells Fargo Securities LLC.

Proceeds will be used to refund a portion of the district's outstanding bonds.

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