Munis Unchanged; California DWR Sells

20080423iorkiori-1-scarchilli-michael.jpg

The municipal market was largely unchanged yesterday, with a slightly weaker tone, as the California Department of Water Resources came to market with a $633 million revenue bond offering.

"We had a good bit of supply in the market, and that's what most folks were paying attention to," a trader in Los Angeles said. "Short-end yields are higher a basis point or two, but overall, we're pretty much unchanged."

The Treasury market showed some losses yesterday. The yield on the benchmark 10-year Treasury note, which opened at 3.69%, finished at 3.74%. The yield on the two-year note was quoted near the end of the session at 2.20%, after opening at 2.19%.

In the new-issue market yesterday, Goldman, Sachs & Co. priced $633 million of Central Valley Project water system revenue bonds for the DWR. The bonds mature from 2008 through 2029, with yields ranging from 1.70% with a 3% coupon in 2008 to 4.55% with a 5% coupon in 2029. The deal will convert $189 million of auction-rate bonds into fixed-rates. Proceeds are also being used to retire commercial paper. The bonds, which are callable at par in 2018, are rated Aa2 by Moody's Investors Service and AAA by Standard & Poor's.

Yield levels were selectively lowered at re-pricing. Yields on bonds maturing in 2019, and from 2024 through 2028, were lowered by two basis points. Yields on bonds maturing in 2020, 2023, and 2029 were lowered by three basis points. And yields on bonds maturing in 2021 and 2022 were lowered by five basis points. The yields on bonds maturing from 2008 through 2018 were not altered at re-pricing.

Among 5% coupon paper in the deal, bonds maturing in 2011 were tightest to Tuesday's Municipal Market Data triple-A yield curve, with yields 10 basis points over. Bonds maturing in 2009, 2013, 2014, and from 2021 through 2023 were widest to the scale, with yields 15 basis points over.

The institutional pricing follows Tuesday's retail order period, during which about $170 million of bonds were sold, according to Tom Dresslar, spokesman for California Treasurer Bill Lockyer. Yields during the retail order period ranged from 1.75% in 2008 to 4.57% in 2029. Bonds maturing from 2019 through 2022 and from 2024 through 2028 were not offered during the retail order period. This comprised approximately $345 million of the sale.

In other activity, UBS Securities LLC priced $462.8 million of school facilities construction refunding bonds for the New Jersey Economic Development Authority. The bonds mature from 2009 through 2019, with yields ranging from 2.25% with a 4% coupon in 2009 to 4.28% with a 5% coupon in 2019. Bonds maturing in 2008 and 2009 were not formally re-offered. The bonds, which are callable at par in 2018, are rated A1 by Moody's, AA-minus by Standard & Poor's, and A-plus by Fitch Ratings.

JPMorgan priced $200 million of revenue bonds for the Colorado Health Facilities Authority in four series. The $40 million of Series C-2 bonds mature in 2041 and are priced at par to yield 3.75%. The $40 million Series C-4 also matures in 2041 and is priced at par to yield 3.75%. Bonds from the $60 million Series C-6 mature in 2036 and are priced at par to yield 4.00%. Bonds from the $60 million Series C-8 mature in 2036 and are priced at par to yield 4.125%. The bonds are not callable. The credit is rated Aa2 by Moody's and AA by both Standard & Poor's and Fitch.

Goldman, Sachs & Co. priced $176.5 million of revenue bonds for the New Jersey Health Care Facilities Financing Authority. The bonds mature from 2009 through 2023, with a term bond in 2027. Yields range from 3.00% with a 5% coupon in 2009 to 5.03% with a 5% coupon in 2027. The bonds, which are callable at par in 2018, are rated A1 by Moody's and A-plus by Standard & Poor's.

JPMorgan priced $160 million of oil franchise tax senior revenue bonds for the Pennsylvania Turnpike Commission. The bonds mature from 2024 through 2029, with a term bond in 2032. Yields range from 4.44% with a 5% coupon in 2024 to 4.72% with a 5% coupon in 2032. The bonds, which are callable at par in 2018, are insured by MBIA Insurance Corp. The underlying credit is rated A1 by Moody's and AA by Standard & Poor's.

Merrill Lynch & Co. priced $140 million of general obligation highway capital improvement bonds for Ohio. The bonds mature from 2009 through 2018, with yields ranging from 1.65% with a 3.5% coupon in 2009 to 3.715 with a 5% coupon in 2018. The bonds, which are not callable, are rated Aa1 by Moody's, AAA by Standard & Poor's, and AA-plus by Fitch.

Illinois competitively sold $125 million of GOs to Citi at a true interest cost of 4.45%. The bonds mature from 2009 through 2029, with a term bond in 2033. Yields range from 2.69% with a 4.75% coupon in 2011 to 4.73% with a 5% coupon in 2033. Bonds maturing in 2009 and 2010 were not formally re-offered. The bonds, which are callable at par in 2017, are rated Aa3 by Moody's and AA by Standard & Poor's.

Scottsdale, Ariz., competitively sold $120 million of GOs to BB&T Capital Markets at a TIC of 4.30%. The bonds mature from 2009 through 2030, with a term bond in 2034. Yields range from 2.10% with a 3% coupon in 2009 to 4.66% with a 4.5% coupon in 2034. Bonds maturing in 2019, 2021, 2027, and 2028 were not formally re-offered. The bonds, which are callable at par in 2018, are rated triple-A by all three major ratings agencies.

The economic calendar was light yesterday. However, a slate of economic data will be released today and tomorrow. Today, durable goods orders for March, initial jobless claims for the week ended April 19, continuing jobless claims for the week ended April 12, and March new home sales will be released. And tomorrow, the final April University of Michigan consumer sentiment index is slated for released.

Economists polled by IFR Markets are predicting a 0.6% rise in durable goods orders, a 0.6% increase in durable goods orders excluding transportation, 375,000 initial jobless claims, 3.000 million continuing jobless claims, 580,000 new home sales, and a 63.2 Michigan sentiment index.

 

For reprint and licensing requests for this article, click here.
MORE FROM BOND BUYER