Municipals end weaker following cheaper Treasuries; California brings $2.8 billion of notes

By Sheri Kasprzak

New York, Sept. 10 – Municipals followed but outperformed weaker Treasuries on the session, with yields cheaper by 1 to 3 basis points, traders reported.

“We’re not moving quite as much as Treasuries, but there’s a weaker tone,” said a trader in the afternoon.

Treasuries ended weaker on the day as speculation about rate hikes sent yields higher. Next week, the Federal Open Market Committee is set to release its rate forecasts. The benchmark 10-year Treasury note yield rose by 4 bps to close the session at 2.54%, and the 30-year bond yield climbed by 3 bps at 3.26%. The five-year note yield rose by 3 bps at 1.79%.

California brings $2.8 billion

Heading up the day’s primary action, the State of California hit the market with $2.8 billion of series 2014-2015 revenue anticipation notes.

The notes (MIG 1/SP-1+/F1) were sold competitively. The winning bidders included Morgan Stanley & Co. LLC, J.P. Morgan Securities LLC and Goldman Sachs & Co.

The notes are due June 22, 2015 and have a 1.5% coupon priced at 101.034 to yield 0.11%, said a pricing sheet.

Proceeds will be used to finance general fund expenditures ahead of the collection of certain revenues in the coming fiscal year.

“This was an outstanding result, and that almost seems like an understatement given the numbers,” Bill Lockyer, California Treasurer, said in a statement.

“It shows what you can do in the market with a demonstrated commitment to sound budgeting and sustained fiscal discipline.”

Palm Beach school notes price

In other short-term note offerings, the Palm Beach County School District of Florida offered up $115 million of series 2014 tax anticipation notes.

The notes (MIG 1) were sold competitively, but the issuer did not immediately respond to requests for the winner Wednesday.

The notes are due Jan. 30, 2015 and have a 1.25% coupon priced at 100.406 to yield 0.08%, said a term sheet.

Proceeds will be used to finance operating expenditures for the district in the 2014-2015 fiscal year.

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