Municipals improve slightly as competitive deals hit market; California brings $1.74 billion

By Sheri Kasprzak

New York, Sept. 25 - Yields were improved somewhat as supply continued to hit the market, including several competitive offerings, market insiders reported. Muni yields were better by 1 basis point to 2 bps across most of the yield curve, a trader said.

"Supply is still strong. Demand is still strong. New issues are being well-absorbed," one trader said.

"Yields are improving slightly. So far, not a bad day."

Meanwhile, the week's largest offering came to market. The State of California priced $1,737,990,000 of series 2012 various purpose general obligation bonds and various purpose G.O. refunding bonds.

The California deal included $961.75 million of various purpose G.O. bonds and $776.24 million of various purpose G.O. refunding bonds. The deal was upsized from $1.55 billion.

The G.O. bonds are due 2013 to 2022 with term bonds due in 2036, 2037 and 2042. The serial coupons range from 2% to 5%. The G.O. refunding bonds are due 2013 to 2030 with 4% to 5% coupons.

The bonds (A1//A-) were sold through RBC Capital Markets LLC.

Proceeds will be used to fund various capital needs and to refund existing G.O. debt.

"It was reported that orders were received for about 41% of the issue [during the retail order period]," said Alan Schankel, managing director with Janney Montgomery Scott LLC.

"Monday's repricing included downward yield adjustments in several maturities."

Broomfield sells debt

Amid the competitive offerings Tuesday, the City and County of Broomfield, Colo., came to market with $108,565,000 of series 2012 sales and use tax revenue refunding bonds (Aa3), said a pricing sheet.

The deal included $99.31 million of series 2012A bonds and $9,255,000 of series 2012B bonds.

The 2012A bonds are due 2014 to 2031 with 3% to 5% coupons. The 2012B bonds are due 2012 to 2014 with coupons from 0.375% to 0.75%, all priced at par.

Bank of America Merrill Lynch won the bid with a 2.665726% true interest cost, said Rosann Doran, the city and county's spokeswoman.

Proceeds will be used to refund the city and county's series 2002A-C and 2009 revenue bonds.

"Market conditions are always a factor," Doran said in an interview.

"The city is not required to go the competitive bid route. The decision to go to competitive bid rather than negotiate the sale was at the city council's direction in this instance."

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