Munis end flat to softer ahead of $10 billion supply; California State, Chicago deals top slate

By Sheri Kasprzak

New York, July 13 – Municipals rounded out a slow session flat to slightly softer, following a weaker Treasuries market, insiders said, as investors awaited a heftier new-issue calendar.

Yields on top-rated munis were seen unchanged to 1 to 2 basis points higher, traders said in the afternoon. Meanwhile, over in Treasuries, Greece and its creditors reached an €86 billion agreement, sending investors back to riskier pastures. The five-year Treasury note yield rose by 3 bps, and the 10-year yield rose by 2 bps.

This week’s calendar will be much heavier with about $10 billion of new offerings poised to price. The calendar will be topped by three $1 billion-plus deals led by a $1.1 billion revenue deal from California State University.

CSU readies deal

That California State deal includes $1.07 billion of series 2015A bonds due 2015 to 2048 and $30 million of series 2015B taxable bonds due 2016 to 2035.

The bonds (Aa2/AA-/) will be offered Wednesday through lead managers J.P. Morgan Securities LLC and Wells Fargo Securities LLC, and the issuer plans to use the proceeds to construct, renovate, equip and improve university facilities and to refund existing debt.

Chicago eyes offering

Another major deal comes from Chicago, which is set to price $1,073,360,000 of general obligation bonds during the week.

Morgan Stanley & Co. LLC leads the syndicate selling the bonds (/BBB+/A-).

Proceeds will repay short-term debt, terminate a sale/leaseback of the Orange Line rapid transit rail line and terminate an interest rate swap agreement related to sales tax revenue bonds.

Indiana Toll Road plans sale

The third of the three billion-dollar deals comes from the Indiana Toll Road for the ITR Concession Co. The $1 billion of series 2015 senior secured notes will be sold on Wednesday.

BofA Merrill Lynch is the senior manager.

Proceeds will be used to partially refinance ITR Concession’s acquisition term loan facility and to fully refinance its acquisition bridge loan facility, which were used to wholly acquire the remaining concession term interest of the Indiana Toll Road concession and lease agreement.

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