The largest deal of the week, $900 million of Los Angeles County tax and revenue anticipation notes priced by JPMorgan on Wednesday, were instantly bought-up, market participants said.
The notes had a 0.12% yield with a 1.5% coupon maturing in 2015 with no call option. The deal received an MIG1 rating from Moody's Investor Service, SP-1+ from Standard & Poor's and F1+ from Fitch Ratings.
"The LA USD is a nice, big-focus deal for a lot of people to pay attention to," a trader in Florida said.
Investors said the deal received heavy demand for a variety of reasons, the most prominent of which was because it was a short-term note deal so buyers are not exposed to much duration risk, according to the trader in Florida. He also said the deal is attractive to investors because it is a California credit.
"From general market perspective should be well received," he said. "There is plenty of demand for California paper."
A trader in Virginia explained that California paper is attractive because its spreads continue to compress to very tight levels.
The credit spread between the benchmark triple-A 10-year general obligation bond and the benchmark California 10-year bond had compressed by 18 basis points to negative 29 from June 4, 2013 to June 3, 2014, according to Municipal Market Data Interactive.
California paper is also desired because of the state's high tax, so it is particularly attractive to California residents, the trader in Virginia said.
"California has an exceptionally high state-tax, so [California residents] will buy this deal," he said. "California supply this year is not close to meeting its demand."
Jim Colby, chief municipal strategist at Van Eck Global, said in an interview that this year's lack of supply will ramp-up the desire for the close to $1 billion deal. Supply this year has remain low totaling only $113.91 billion as of May 31, compared to $153.03 billion for the same period in 2013.
The largest long term bond pricing scheduled for this week is a $431.2 million sale of Regional Transportation District of Colorado certificates of participation. JPMorgan is the lead underwriter and the deal is rated Aa3 by Moody's, and A by both S&P and Fitch.
Piper Jaffray will bring $290 million of Phoenix, AZ GO refunding bonds. The deal received an Aa1 rating from Moody's and AA-plus from S&P.
JP Morgan Securities will issue $250 million of taxable Texas Public Finance Authority revenue bonds. The deal is rated Aaa by Moody's and AAA by Fitch.
BMO Capital Markets will bring $186.5 million of tax-exempt Wyandotte County, Unified Government revenue bonds. The deal received an A-plus rating from both S&P and Fitch.
Citigroup Global Markets will issue $145.4 million of Phoenix Union High School District improvement and refunding bonds. The deal is rated Aa2 by Moody's and AA by S&P.
JP Morgan Securities won the bid for $258.3 million of Columbus, Ohio GOs. The bonds' coupons range from 5% in 2016 to 4% in 2035.
The bonds are callable at par in 2024 and are rated AAA by all three rating agencies.
Yields for municipal bonds maturing in four-to 30-years rose by one to three basis points, and the front end of the curve held steady, according to MMD.
Treasuries weakened Wednesday afternoon, with the 10-year benchmark and the two-year note inching up one basis point each to 2.61% and 0.41%, respectively. The 30-year yields climbed two basis points to 3.45%.
