Municipals flat to weaker ahead of heavier supply; Los Angeles USD preps $1.7 billion offering

By Sheri Kasprzak

New York, June 9 – Municipals had a somewhat weaker tone as the market prepared to take on a larger-than-normal new-issue calendar, market insiders said.

Short to intermediate yields were seen a touch weaker, but long bonds were mostly flat. The market outperformed Treasuries, which felt the pressure of a sell-off in the belly of the curve.

Over in Treasuries, the 10-year note yield rose by 1.5 basis points on the session to close at 2.611%. The five-year note yield climbed by 3 bps to 1.682%, and the 30-year bond yield rose by 1 bp to 3.446%.

Los Angeles USD deal set

Moving to the week’s new-issue calendar, the Los Angeles Unified School District is scheduled to price $1,703,000,000 of series 2014 general obligation bonds in four tranches.

The offering includes $197,465,000 of series 2014A bonds, $356.8 million of series 2014B bonds, $981.53 million of series 2014C bonds and $167,205,000 of series 2014D bonds.

The bonds will be sold through lead manager J.P. Morgan Securities LLC.

Proceeds will be used to advance or current refund existing debt held by the district.

NYC bonds ahead

Looking to other major offerings, the City of New York is scheduled to price $850 million of series 2014J-K G.O. bonds (Aa2/AA/AA). A retail order period for the offering was conducted Monday.

The bonds will be sold through Morgan Stanley & Co. LLC.

The offering includes $765 million of series 2014J bonds and $85 million of series 2014K bonds.

Houston to sell debt

Another major offering ahead during the week comes from the City of Houston, which plans to price $530 million of series 2014D first-lien combined utility system revenue and refunding bonds.

The offering will be sold through Goldman Sachs & Co.

Proceeds will be used to extend, improve and repair the city’s utility system as well as to refund all of the city’s series B commercial paper notes and a portion of its water and sewer system revenue bonds.

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