Municipals hold steady even as Treasuries drop; California brings $1.48 billion of G.O. bonds

By Sheri Kasprzak

New York, April 20 – Municipals ended the session mostly flat despite a sagging Treasuries market, insiders said.

The 10-year triple-A benchmark muni bond yield remained at 1.70% and the 30-year bond yield at 2.68%.

Oil prices rebounded on the day, pushing Treasury yields higher. The 30-year Treasury bond yield rose by 6 basis points to 2.66% and the 10-year yield by 6 bps to 1.85%.

California prices G.O. bonds

The week’s largest offering came from the State of California, which priced $1,480,670,000 of series 2016 various purpose general obligation bonds on Tuesday. The full details became available Wednesday.

The deal was downsized from $1,488,795,000 and includes $236,795,000 of series 2016 Group A taxable various purpose G.O. bonds, $176.03 million of series 2016 Group B various purpose G.O. bonds, $56.2 million of series 2016 Group C various purpose bonds, $461,145,000 of series 2016 Group B tax-exempt refunding bonds an $550.5 million of series 2016 Group C tax-exempt refunding bonds.

Deal in three groups

The Group A taxable bonds are due 2017 to 2018 with a term bond due in 2021. The serial coupons range from 0.90% to 1.50% with yields from 0.60% to 0.80%. The 2021 bonds have a 1.5% coupon and priced at par.

The Group B various purpose bonds are due 2021 to 2025 with 4% to 5% coupons and yields from 1.09% to 1.68%.

The Group C various purpose bonds are due 2028 and 2035. The 2028 bonds have a 5% coupon and priced at 128.006 to yield 1.99%, and the 2035 bonds have a 3% coupon and priced at par.

The Group B tax-exempt refunding bonds are due 2017 to 2026 with 4% to 5% coupons and yields from 0.61% to 1.79%.

The Group C tax-exempt refunding bonds are due 2027 to 2036 with 3% to 5% coupons and yields from 1.91% to 3.05%.

The bonds (Aa3/AA-/A+) were sold competitively. The Group A bonds were won by Wells Fargo Securities LLC at a 1.329999% true interest cost, and the Group B bonds were won by J.P. Morgan Securities LLC at a 1.530566% TIC. The Group C bonds were won by BofA Merrill Lynch at a 2.825815% TIC.

Proceeds will be used to finance capital projects, pay outstanding G.O. commercial paper notes and current refund the state’s series 2013A highway safety, traffic reduction, air quality and port security bonds.

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