NEW YORK - The California municipal market was unchanged Monday as participants returned from a long holiday weekend to a lightly-traded secondary ahead of $11.27 billion of issuance in the primary slated for later this week.
"This figures to be a pretty busy week, but that wasn't really the case today," a trader in Los Angeles said. "Secondary trading was pretty light and people were just sort of easing themselves back from the holiday. I'd call it unchanged on the day, and we'll see where things go the rest of the week."
The Municipal Market Data triple-A scale yielded 2.82% in 10 years Monday, unchanged from Friday, while the 20-year scale yielded 3.97%, also even with Friday. The scale for 30-year debt remained flat at 4.31% Monday.
Monday's triple-A muni scale in 10 years was at 99.6% of comparable Treasuries and 30-year munis were at 103.6%, according to MMD. Meanwhile, 30-year tax-exempt triple-A general obligation bonds were at 111.9% of the comparable London Interbank Offered Rate.
The Treasury market was mostly firmer Monday. The benchmark 10-year note was quoted recently at 2.84% after opening at 2.87%. The 30-year bond was quoted recently at 4.16%, after opening at 4.21%. The two-year note was quoted recently at 0.52% after opening at 0.51%.
In the primary market this week, the Los Angeles Department of Water and Power will make its second appearance in as many weeks Tuesday when it sells $492.7 million of water system revenue bonds structured as taxable Build America Bonds in a deal slated to be priced by joint managers JPMorgan and Siebert Brandford Shank & Co. This follows a $760.2 million BAB issuance last week.
The bonds are rated Aa2 by Moody's, AA by Standard & Poor's, and AA-plus by Fitch.
In the new-issue market Monday, California's Orange County Sanitation District competitively sold $157 million of taxable BABs to Barclays Capital.
The BABs mature in 2032 and 2040. Bonds maturing in 2044 yield 6.28% with a 6.4% coupon, or 4.08% after the 35% federal subsidy. Bonds maturing in 2032 were not formally re-offered.
The bonds, which were priced to yield 210 basis points over the 30-year Treasury yield, contain a make-whole call at Treasuries plus 30 basis points. The credit is rated triple-A by both Standard & Poor's and Fitch.
The economic calendar was light Monday.
Previous Session's Activity
The most actively traded security in the state yesterday was taxable California BABs 7.7s of 2030, which traded 52 times at a high of 103.850 and a low of 100.957.
