NEW YORK – The California municipal market was unchanged to slightly weaker Monday amid fairly light secondary trading activity.
“There’s a bit of weakness out there,” a trader in Los Angeles said. “Inside of 10 years or so, it’s pretty much flat, but past that, we’re looking at maybe two or three basis points weaker.”
Municipal Market Data's triple-A scale yielded 2.46% in 10 years Monday, even with Friday’s level, while the 20-year scale yielded 3.55%, two basis points more than Friday’s 3.53%. The scale for 30-year debt climbed four basis points to 3.97% Monday from 3.93% Friday.
Monday’s triple-A muni scale in 10 years was at 93.4% of comparable Treasuries and 30-year munis were at 95.1%, according to MMD, while 30-year tax-exempt triple-A general obligation bonds were at 105.6% of the comparable London Interbank Offered Rate.
The Treasury market showed losses Monday. The benchmark 10-year note was quoted recently at 2.56% after opening at 2.53%. The 30-year bond was quoted recently at 4.12% after opening at 4.12%. The two-year note was quoted recently at 0.41% after opening at 0.37%.
A hefty $10.22 billion of new municipal volume heads to the primary market this week, according to Ipreo LLC and The Bond Buyer.
In municipals, an $875.8 million Los Angeles Department of Airports revenue offering represents the largest deal of the week and headlines a bevy of California issues. Four of the largest deals of the week are from the Golden State.
The department aims to get the financing on behalf of Los Angeles International Airport off the ground Wednesday when senior book-runner JPMorgan prices the Series 2010D senior revenue bonds following a retail order period on Tuesday.
The bonds have ratings of Aa3 from Moody's Investors Service and AA from Standard & Poor's and Fitch Ratings.
The bulk of the week's activity will take place in the negotiated market, where an estimated $8.91 billion of the week's total volume is expected. That represents a stark contrast to the revised $3.02 billion that arrived last week, according to Thomson figures.
The glut of California supply will also include a $760 million sale from the University of California Medical Center, which is structured as three series of pooled revenue bonds, all rated Aa2 by Moody's and AA-minus by Standard & Poor's.
Barclays Capital is planning to price the issue on Tuesday. On Monday it will take retail orders for the tax-exempt bonds in Series 2010G and indications of interest for the taxable BABs in Series 2010H, and traditional taxable bonds in Series 2010I.
The Los Angeles County Public Works Financing Authority will add to the new-issue activity when it sells $805 million of lease revenue debt on Wednesday following a retail order period planned for Tuesday by senior book-runner Bank of America-Merrill Lynch.
The bonds, which are rated A1 by Moody's, and A-plus by Standard & Poor's and Fitch, are structured to include $700 million of taxable BABs and recovery zone economic development bonds, as well as $105 million of tax-exempt debt.
Elsewhere in California, the Santa Clara Valley Transportation Authority is readying a $650 million sale of sales tax revenue bonds.
The deal is structured as two series of bonds: $515 million of Series 2010A taxable BABs and $135 million of Series 2010B tax-exempt bonds.
Rated Aa2 by Moody's and AA-plus by Standard & Poor's, the bonds are expected to be priced by co-senior managers Barclays and Citi.
The economic calendar was light Monday.
Activity in the California new-issue market was light Monday.
Previous Session's Activity
The most actively traded security in the state yesterday was taxable San Joaquin 7.54s of 2040, which traded 130 times at a high of 100.500 and a low of 97.087.
