Yields hold steady as new deals are warmly received; California brings $5.4 billion RANs early

By Sheri Kasprzak

New York, Sept. 14 - Municipals closed out a busy day for the primary market on a steady note with some firmness, insiders reported. Yields were reportedly down by 1 basis point to 4 bps across most of the yield curve, said one trader.

Five-year yields were the most improved, down more than 4 bps, and 15-year yields were seen down about 3 bps, the trader said. The rest of the market was relatively steady, with yields up or down about a basis point.

"There's a bit more secondary [trading] going on today," said the trader.

"We seem to be moving with Treasuries, but I think the interest [in secondary] is pushing us a bit today as well."

Heading up the primary slate on Wednesday, the State of California came a day early with its $5.4 billion sale of series 2011-12 revenue anticipation notes.

The offering included $500 million of series 2011-12-A1 notes and $4.9 billion of series 2011-12-A2 notes, said Tom Dresslar, spokesman for the state treasurer's office.

Yields from 0.38% to 0.4%

The A1 notes are due May 24, 2012 and have a 2% coupon to yield 0.38%. The A2 notes are due June 26, 2012 and have a 2% coupon to yield 0.4%.

The bonds (MIG 1/SP-1+/F1) were sold on a negotiated basis with Wells Fargo Securities LLC as the senior manager.

Yields for retail investors ranged from 0.4% to 0.55%, Dresslar said, after Tuesday's retail order period. Dresslar noted that retail investors took $3.55 billion of notes, or 65.7% of the offering.

"The state reduced taxpayers' interest costs by more than 100 bps compared to California's November 2010 RAN sale," Dresslar said in a statement.

"In that transaction, the yields were 1.5% for a May maturity and 1.75% for a June maturity."

Proceeds will be used to pay off a $5.4 billion bridge loan the state received on July 26 from eight banks.

California State brings bonds

Elsewhere in the Golden State on Wednesday, California State University brought to the table $245 million of series 2011A system-wide revenue bonds, said early pricing data.

The bonds were sold through Barclays Capital Inc. and Loop Capital Markets LLC.

The bonds are due 2012 to 2031 with term bonds due in 2037 and 2041. The serial coupons range from 0.55% to 5.25%. The 2037 bonds and the 2041 bonds have 5% coupons.

Proceeds will be used to finance or refinance the construction, acquisition, equipment and renovation of existing California State University facilities.

Maryland sells $200 million

In other news, the State of Maryland came to market with $200 million of series 2011E tax-exempt general obligation bonds, said a pricing sheet.

The bonds (Aaa/AAA/AAA) were sold through J.P. Morgan Securities LLC.

The bonds are due 2014 to 2019 with 2% to 5% coupons.

Proceeds will be used to advance refund existing G.O. bonds.

Philadelphia gas bonds price

Also in the market Wednesday was the City of Philadelphia, which priced $88.855 million of gas works revenue refunding bonds, said a pricing sheet.

The offering include $16.245 million of 1975 general ordinance 20th series bonds and $72.61 million of 1998 general ordinance 10th series bonds.

The 20th series bonds are due 2012 to 2015 with 2% to 5% coupons. The 10th series bonds are due 2012 to 2026 with 3% to 5% coupons.

Bank of America Merrill Lynch and Siebert Brandford Shank & Co. LLC were the senior managers for the bonds (Baa2/BBB+/BBB+).

Proceeds will be used to refund the Philadelphia Gas Works' series 1975 refunded bonds and 1998 refunded bonds.

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