Municipals end day little changed ahead of $5 billion slate; California State deal leads sales

By Sheri Kasprzak

New York, July 28 – Municipals closed mostly flat during the quiet session Monday, outperforming weaker Treasuries, insiders said.

Yields were flat to mixed in spots. One trader noted that the market continues to demonstrate strong technicals and that demand remains relatively strong.

This week’s new issues will total just under $5 billion, making this the slowest July for supply since 2010, said Alan Schankel, managing director with Janney Montgomery Scott LLC.

“Low supply and solid demand fueled by strong summer reinvestment flows and continuing mutual fund inflows underlie the favorable technical factors supporting recent strong tax-free performance,” he wrote.

Meanwhile, over in the Treasuries market, yields climbed after the Treasury Department auctioned $29 billion of two-year notes to lackluster demand and at the highest yield since May 2011.

Shorter bonds were the most changed with the five-year Treasury note yield rising by 3 basis points on the session to close at 1.705%. The 10-year note yield rose by 2 bps to 2.487%, and the 30-year bond yield rose by 1 bp to 3.255%.

CSU deal tops sales

Moving to the week’s specific offerings, California State University will hit the market on Thursday with $744,235,000 of series 2014A system-wide revenue bonds (/AA-/) following a retail order period on Wednesday.

Barclays; Stifel, Nicolaus & Co. and Siebert Brandford Shank & Co. LLC are the joint bookrunners for the deal.

The bonds are due 2014 to 2044.

Proceeds from the sale will be used to finance improvements to student housing, student unions, parking, student health and continuing education centers at all 23 CSU campuses and to refund existing debt.

Also on Thursday, George Washington University of D.C. plans to offer $300 million of series 2014 taxable bonds through Barclays, J.P. Morgan Securities LLC and Loop Capital Markets LLC.

Proceeds will be used for general corporate purposes.

Connecticut preps G.O. bonds

Out on the horizon, the State of Connecticut has announced plans to price $510.59 million of series 2014 general obligation bonds on Aug. 6.

The three-tranche offering will be sold competitively with Acacia Financial Group Inc. and A.C. Advisory Inc. as the financial advisers.

Proceeds will be used to finance capital expenditures for the state and to refund existing G.O. debt.

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