Municipals end weaker again; California Public Works Board to bring $793 million jail offering

By Sheri Kasprzak

New York, March 24 - The municipals market was somewhat weaker again on Monday as insiders awaited the week's new offerings, traders said.

Yields were up by 1 basis point to 2 bps, a trader said during the session, as Treasuries ended the day mixed. The five-year Treasury note yield climbed by 1.5 bps, and the 30-year bond yield fell by 4 bps. The 10-year note yield climbed by 1.5 bps.

The weakness comes after the Federal Reserve indicated a looming rate hike for the Federal Funds rate. Many speculate this increase could come in early 2015.

Municipals trading activity remained very light Monday afternoon, according to a trader reached late in the day.

California PWB deal set

The California State Public Works Board will lead the coming week's primary action, which is expected to total about $5 billion. The board will price $793 million of series 2014A Department of Corrections and Rehabilitation lease revenue bonds (A2/A-/A-/) through Morgan Stanley & Co. LLC and Wells Fargo Securities LLC.

Proceeds from the offering will be used to finance the construction of the Mule Creek State Prison and the Richard J. Donovan Correctional Facility.

The board's A- rating from Fitch Ratings is linked to the State of California's A general obligation rating.

In April 2012, the board came to market with $267,625,000 of lease revenue bonds for Kern County at Delano II State Prison. In that offering, the bonds are due 2015 to 2028 with coupons from 4% to 5% and yields from 1.33% to 4.22%.

Atlanta preps offering

Another major offering for the week comes from the City of Atlanta, which is set to price $705.57 million of series 2014 general revenue bonds in three tranches.

The offering includes $376.37 million of series 2014A non-AMT passenger facility charge and subordinate-lien general revenue refunding bonds, $144.14 million of series 2014B non-AMT airport general revenue refunding bonds and $185.06 million of series 2014C AMT airport general revenue refunding bonds.

The bonds will be sold through Siebert Brandford Shank & Co. LLC and SunTrust Robinson Humphrey.

Proceeds will be used to refund the airport's series 2004B, 2004C and 2004J general revenue bonds.

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