Munis close stronger as secondary draws in bids; California Public Works sells $935.84 million

By Sheri Kasprzak

New York, March 22 - Municipal yields were firmer yet again on Thursday as the secondary drew some interest and some improved bids, said traders.

"We are definitely getting in more bids and stronger ones at that, and interest in new deals is coming in," said a trader reached during the session.

"The new stuff does seem to be doing very well [in secondary]."

Meanwhile, the new-issue calendar is expected to dry up substantially in the coming week, said Alan Schankel, managing director with Janney Montgomery Scott LLC. Only about $2 billion of new bonds are expected, he said Thursday.

California PWB brings debt

Heading up the day's action, the California Public Works Board sold $935.84 million of series 2012A capital projects lease revenue bonds, said a term sheet released by the state treasurer's office.

The bonds (A2/BBB+/BBB+) were sold through senior manager Goldman Sachs & Co.

The bonds are due 2014 to 2034 with a term bond due 2037. The serial coupons range from 2% to 5% with yields from 1.06% to 4.80%. The 2037 bonds have a 5% coupon and priced at 100.782 to yield 4.90%.

Proceeds will be used to finance capital projects throughout the state, including the construction of a prison health-care facility in Stockton, the enhancement of an outpatient treatment space and office space at the Salinas Valley State Prison in Soledad and the construction of a county courthouse in Madera.

"Given the market uncertainties we faced entering the sale, the results are very gratifying," Treasurer Bill Lockyer said in a statement released Thursday. "We're extremely pleased the final outcome gives the state a better deal."

According to the treasurer's spokesman, Tom Dresslar, strong market reception pushed yields down across all maturities compared to preliminary rates during the retail order period conducted Wednesday.

The yield for the 10-year bonds dropped 17 basis points to 3.66% from 3.83% on Wednesday, Dresslar said, and the five-year yield dropped to 2.2% from 2.22%. The 20-year yield fell to 4.69% from 4.72%.

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