California’s big taxable bond offering hit the market on Thursday as municipal bonds weakened in secondary trading.

Primary market
JPMorgan Securities took indications of interest in the morning on the state of California’s $1.25 billion of taxable general obligation high-speed passenger train bonds.

Price guidance was issued as follows:

The $648.47 million of Series 2017A fixed-rate bonds were priced to yield about 27 basis points over the comparable Treasury security in 2018, about 42 basis points over the comparable Treasury security in 2019, about 45 basis points over the comparable Treasury security in 2021 and about 63 basis points over the comparable Treasury security in 2022. There is no optional call.

The $300 million of Series 2017B mandatory put bonds were priced to yield about 82 basis points over the comparable Treasury security in 2047; the bonds have an optional call at par in 2019.

The $300 million of Series 2017C floating rate bonds were priced to yield about 78 basis points above the one-month Libor. The bonds have an optional call in 2021 at par.

The deal is rated Aa3 by Moody’s Investors Service and AA-minus by S&P Global Ratings and Fitch Ratings.

RBC Capital Markets priced Houston, Texas’ $281.02 million of Series 2017B combined utility system first lien revenue refunding bonds.

The issue was priced to yield from 1.12% with a 4% coupon in 2019 to 2.60% with a 5% coupon in 2029 and from 2.95% with a 5% coupon in 2034 to 3.10% with a 5% coupon in 2038. A 2042 maturity was priced as 5s to yield 3.19% and a 2047 maturity was priced as 5s to yield 3.24%.

The deal is rated Aa2 by Moody’s and AA by Fitch.

Since 2007, Houston has issued about $13.66 billion of debt, with the most issuance occurring in 2014 when it sold $2.52 billion of securities. It saw a low of $485 million in 2015, one of only three times the Space City has not issued more than $1 billion in a year in the past decade.

Stifel is set to price the Chino Valley Unified School District, Calif.’s $208 million of Series 2017A election of 2016 Hos.

The deal is rated Aa3 by Moody’s and A-plus by S&P.

Piper Jaffray is expected to price the Kansas University Hospital Authority’s $200 million of Series 2017 healthcare revenue bonds.

The deal is rated AA-minus by S&P.

Secondary market
At midday, the yield on the 10-year benchmark muni general obligation was as much as two basis points higher from 2.03% on Wednesday, while the 30-year GO yield increased two to four basis points from 2.86%, according to a read of Municipal Market Data's triple-A scale.

U.S. Treasuries were weaker on Thursday. The yield on the two-year Treasury rose to 1.20% from 1.18% on Wednesday, while the 10-year Treasury yield gained to 2.25% from 2.21%, and the yield on the 30-year Treasury bond increased to 2.90% from 2.87%.

On Wednesday, the 10-year muni to Treasury ratio was calculated at 92.1%, compared with 92.9% on Tuesday, while the 30-year muni to Treasury ratio stood at 99.9%, versus 100.8%, according to MMD.

MSRB: Previous session's activity
The Municipal Securities Rulemaking Board reported 43,294 trades on Wednesday on volume of $11.62 billion.

Tax-exempt money market fund outflows
Tax-exempt money market funds experienced outflows of $1.19 billion, bringing total net assets to $129.15 billion in the week ended April 17, according to The Money Fund Report, a service of iMoneyNet.com.

This followed an inflow of $95.3 million to $130.34 billion in the previous week.

The average, seven-day simple yield for the 232 weekly reporting tax-exempt funds was unchanged at 0.39% from the previous week.

The total net assets of the 861 weekly reporting taxable money funds decreased $9.59 billion to $2.476 trillion in the week ended April 18, after an outflow of $3.56 billion to $2.485 trillion the week before.

The average, seven-day simple yield for the taxable money funds increased to 0.42% from 0.41% in the prior week.

Overall, the combined total net assets of the 1,091 weekly reporting money funds decreased $10.78 billion to $2.605 trillion in the week ended April 18, after outflows of $3.46 billion to $2.615 trillion in the prior week.

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