Munis better as new issues begin to price; San Francisco Public Utilities prices $193.3 million

By Sheri Kasprzak

New York, Jan. 15 - Muni yields improved yet again on Tuesday as the new deals of the week began pricing, said market sources.

"Retail seems to be driving the market," one trader said.

"We're getting some really solid retail response. We're also seeing a lot of secondary action, so both sides are strong."

The week ahead will provide about $6.3 billion of new issues, making it a manageable calendar, said Alan Schankel, managing director with Janney Montgomery Scott LLC.

Thirty-day visible supply is about $10 billion including a massive $1.53 billion deal from the JobsOhio Beverage System, said Schankel.

The JobsOhio deal includes two tranches and will be sold through J.P. Morgan Securities LLC and Citigroup Global Markets Inc.

The proceeds from the bonds (Aa2/AA/) will be used to grant the system exclusive rights to operate a liquor enterprise and provide additional working capital for the enterprise.

San Francisco PUC prices

Leading the Tuesday's primary action, the San Francisco Public Utilities Commission of California sold $193.3 million of series 2013A wastewater revenue refunding bonds, said a pricing sheet.

The bonds (Aa3/AA-/) were sold through Citigroup and JPMorgan.

The bonds are due 2013 to 2025 with 1% to 5% coupons.

Proceeds will be used to refund the commission's series 2003A wastewater revenue bonds.

California budget proposal gives 'stability' to universities

Fitch Ratings said Tuesday it believes California's proposed budget will provide some funding stability to the University of California and California State University after several years of declining appropriations. The budget proposal would increase state allocations to the universities by $125 million.

"The state expects the additional funding to improve course offerings and graduation rates at those systems and eliminate the need for UC or CSU to raise tuition and fees in academic year 2013-2014, the second year of flat student charges," said Joanne Ferrigan, a director of U.S. public finance at Fitch.

"The budget, proposed by Gov. Brown on Jan. 10, also references shifting appropriations allocated for debt service costs on certain state G.O. lease revenue bonds to the university systems' budgets and tightening control of the systems' capital spending."

Fitch will review the final budget once it is adopted to determine the impact it will have on the University of California. The university's general revenue bonds are rated AA+ with a stable outlook.

"It is important to note that UC's broad discretion, including over tuition and fee increases, remains an important source of fiscal flexibility and that just 9% of UC's fiscal 2012 operating revenues were derived from state appropriations," Ferrigan said.

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