Municipals end little changed as bulk of deals price; U of California brings upsized offering

By Sheri Kasprzak

New York, April 3 - Municipals closed out the session mostly flat, market sources reported.

Even as Treasuries made some gains during the session, municipals remained quiet with secondary activity dwindling and the last few offerings of the week pricing, said a trader.

"There could be a case made for some spotty firmness, but for the most part, we're unchanged," the trader said in the late afternoon.

Treasuries, meanwhile, made gains. The 30-year bond yield fell by 2.5 basis points on Thursday to close at 3.626%, while the 10-year note yield fell by half a basis point to 2.797%. The five-year note yield was unchanged at 1.794%.

During the quiet session, a few larger deals did hit the market, effectively closing out a relatively light primary calendar.

U of California brings bonds

Leading the day's primary action, the University of California came to market with the largest offering of the week. The university sold $968.46 million of series AM-AN general revenue bonds. The offering was upsized from $950 million.

The deal included $557,225,000 of series AM tax-exempt bonds and $411,235,000 of series AN taxable bonds, said a pricing sheet.

The series AM bonds are due 2015 to 2039 with term bonds due in 2044 and 2049. The serial coupons range from 3% to 5.25%. The 2044 bonds have a 4.25% coupon that priced at 99.827, a 5% coupon that priced at 107.29 and a 5.25% coupon that priced at 110.209. The 2049 bonds have a 5% coupon that priced at 106.439.

The series AN bonds are due 2015 to 2025 with a term bond due in 2044. The serial coupons range from 0.15% to 3.738% and all priced at par. The 2044 bonds have a 4.765% coupon and priced at par.

The bonds (Aa2/AA/) were sold through lead managers Wells Fargo Securities LLC, Goldman Sachs & Co. and Siebert Brandford Shank & Co. LLC.

Proceeds will be used to finance or refinance capital projects for some of the university's campuses.

San Jose college deal prices

Another California education-related deal also hit the market on Thursday. The San Jose-Evergreen Community College District of California priced $250.73 million of series 2014 general obligation and refunding bonds in four tranches.

The offering included $50.85 million of series 2014A refunding bonds, $48,275,000 of series 2014B refunding bonds, $31,605,000 of election of 2004 series 2014C G.O. bonds and $120 million of election of 2010 series 2014C G.O. bonds, said a pricing sheet.

The 2014A bonds are due 2021 to 2029 with 2% to 5% coupons and 2.11% to 3.35% yields.

The 2014B bonds are due 2014 to 2019 with 1% to 5% coupons and 0.17% to 1.46% yields.

The election of 2004 series 2014C bonds are due 2015 to 2032 with coupons from 2% to 5% and yields from 0.323% to 3.60%.

The election of 2010 series 2014C bonds are due 2015 to 2034 with term bonds due in 2040 and 2043. The serial coupons range from 2% to 5% and yields range from 0.22% to 3.70%. The 2040 bonds have a 4% coupon that priced at 96.981 to yield 4.19% and a 5% coupon that priced at 109.382 to yield 3.89%. The 2043 bonds have a 4.125% coupon that priced at 98.074 to yield 4.24%.

The bonds (Aa1/AA/) were sold through senior manager RBC Capital Markets LLC.

Proceeds will be used to finance capital projects for the district and to refund existing G.O. debt.

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