Investors are confident the handful of California deals scheduled to enter the municipal market on Thursday will be well received.
"Reception is a lot more positive," said a New York trader. "The state is in better fiscal shape and the trend seems to indicate continued improvement."
Moody's Investors Service upgraded California's general obligation bond rating to Aa3 from A1 on Wednesday, due to the state's "rapidly improving" financial position.
"With Treasuries rallying, reception will be well in itself," a second New York trader said. "California BABs are trading pretty tight right now. There should be pretty well subscription."
This is the first time in over a decade that California has earned a rating in the double-A category.
"Short-term notes are always gobbled up," a Florida trader said. "There is too much money in the market and guys are looking to park cash. Anything under five years will not have a hard time finding buyers."
The largest deal of the week, $1.4 billion of Los Angeles tax and revenue anticipation notes, were priced by Ramirez & Co. Thursday, to yield 0.11% with a 1.50% coupon.
"The short end is a bit ridiculous right now," a third New York trader said. "There's not enough spread."
The deal received a MIG 1 rating from Moody's Investors Service, SP-1-plus from Standard and Poor's and F1-plus from Fitch Ratings.
"We're not part of California," Miguel Santana, the city administrative officer of Los Angles told The Bond Buyer last Friday. "Even though L.A.'s fiscal situation has improved we haven't been upgraded."
Wells Fargo Securities priced $ 379.7 million of Sacramento County Sanitation District Financing Authority revenue bonds. Yields ranged from 0.35% with a 4% coupon in 2016 to 3.59% with a 5% coupon in 2044. The bonds are callable at par in 2024. The deal is rated Aa3 by Moody's, AA by S&P and AA-minus by Fitch.
Citigroup Global Markets will bring $ 321.8 million of Western Minnesota Municipal Power Agency revenue bonds. The deal is rated Aa3 by Moody's and AA-minus by S&P.
Citigroup Global Markets will issue $213.7 million of Pflugerville, Texas, Independent School District unlimited tax bonds. The bonds mature serially from 2015 to 2039. The deal is rated not yet rated.
Stifel, Nicolaus and Co. will bring $183 million of Rancho Cucamonga Redevelopment Agency, Calif. tax allocation refunding bonds. The deal is rated A-plus by Moody's and AA-minus by S&P.
Munis were mixed Thursday afternoon, with yields on bonds maturing in three to 29 years falling as much as two basis points, while short-term yields held steady.
Treasuries strengthened Thursday afternoon, with the 30-year yield falling three basis points to 3.35% and the 10-year benchmark losing four basis points to 2.52%. The two-year note slipped one basis point to 0.48%.
