The municipal market was slightly weaker yesterday, as California held the second day of a retail order period prior to today’s institutional pricing of its massive $4.5 billion bond sale.

JPMorgan priced for retail investors part of its $1.45 billion sale of taxable debt for California, which includes $250 million of Build America Bonds.

This was day two of the retail order period, preceding institutional pricing today. The BAB component, which is slated to mature in 2024, is not being offered during the retail period.

Of the $1.2 billion general obligation refunding taxable series, the $250 million 2013 maturity is being offered to retail, yielding in a range of 3.50% to 3.75%, priced at par.

The 2014 and 2019 maturities are not being offered to retail. Institutional pricing is set for today. The bonds are rated Baa1 by Moody’s Investors Service and A by Standard & Poor’s.

According to a press release from California Treasurer Bill Lockyer’s office, individual investor orders on the first day of the two-day retail order period totaled $62.4 million for the 2013 maturity, and represent 25% of the $250 million offering to retail investors. Preliminary yields quoted to investors for taxable bonds ranged from 3.50% to 3.75%.

The state is also selling to retail $3 billion of debt. Lockyer said individual investor orders on the tax-exempt debt totaled $360.8 million and represent 28% of the $1.3 billion offering to retail investors.

Preliminary yields quoted to investors for tax-exempt bonds ranged from 2.87% for 2015 maturities to 4.63% for 2029 maturities.

Meanwhile, traders said tax-exempt yields in the secondary market rose about two basis points overall.

“We’re cheapening up a bit,” a trader in New York said. “I’m not seeing a ton of movement, but we’re definitely a little bit weaker. We’re just sort of picking up where we left off yesterday. Overall, we’re probably down about two basis points, but out long, it’s maybe even three. The really short end though is somewhat flat, maybe down a basis point.”

“We’re definitely seeing some losses,” a trader in Los Angeles said. “It’s not incredibly active, but business is getting done, and we are a little bit weaker. I’d say two, maybe three basis points overall, depending on what you’re trading, but yeah, it’s a little weaker.”

The Treasury market showed gains yesterday. The yield on the benchmark 10-year note, which opened at 3.26%, was quoted near the end of the session at 3.18%.

The yield on the two-year note was quoted near the end of the session at 0.87% after opening at 0.90%. aand the yield on the 30-year bond, which opened at 4.07%, ended the session at 4.00%.

Also yesterday, the Municipal Market Data triple-A scale yielded 2.66% in 10 years and 3.48% in 20 years, following respective levels of 2.60% and 3.46% on Tuesday.

As of Tuesday’s close, the triple-A muni scale in 10 years was at 80.0% of comparable Treasuries, according to MMD, and 30-year munis were 95.1% of comparable Treasuries. Thirty-year tax-exempt triple-A rated general obligation bonds were at 98.7% of the comparable London Interbank Offered Rate.

Elsewhere in the new-issue market, Virginia competitively sold $288.2 million of general obligation bonds to Bank of America Merrill Lynch with a true interest cost of 3.17%, in multiple series. 

Bonds from the $100.2 million Series B mature from 2011 through 2024, with yields ranging from 0.64% with a 3% coupon in 2011 to 3.25% with a 5% coupon in 2026.

Bonds maturing from 2012 through 2014, in 2023, and from 2027 through 2034 were sold but not available. The bonds are callable at par in 2019.

Bonds from the $19.9 million Series C mature from 2014 through 2024, with yields ranging from 1.57% with a 3% coupon in 2014 to 3.10% with a 4% coupon in 2023.

Bonds maturing in 2022 and 2024 were sold but not available. The bonds are callable at par in 2019, except bonds maturing in 2020, which are not callable.

Bonds from the $168.2 million Series D mature in 2010, and from 2016 through 2022.

Yields range from 0.37% with a 2.5% coupon in 2010 to 2.97% with a 5% coupon in 2022. The bonds are callable at par in 2019. The credit is rated triple-A by all three major rating agencies.

Georgia’s Gwinnett County Water and Sewerage Authority competitively sold $247.8 million of revenue bonds to B of A Merrill with a TIC of 3.33%.

The bonds mature from 2010 through 2028, with yields ranging from 0.71% with a 3% coupon in 2011 to 3.72% with a 4% coupon in 2027.

Bonds maturing in 2010, 2012, 2014, 2024, and 2028 were sold but not available. The bonds, which are callable at par in 2019, are rated triple-A by all three major agencies.

Jefferies & Co. priced $117.7 million of revenue bonds for Wisconsin. The bonds mature from 2013 through 2017, with yields ranging from 1.73% with a 2.5% coupon in 2013 to 2.84% with a 5% coupon in 2017. The bonds, which are not callable, are rated Aa3 by Moody’s, AA by Standard & Poor’s, and AA-minus by Fitch Ratings.

First Southwest Co. priced $42.3 million of revenue bonds for Texas’ Uptown Development Authority. The bonds mature from 2011 through 2025, with a term bond in 2029.

Yields range from 2.90% priced at par in 2011 to 5.50% priced at par in 2029. The bonds, which are callable at par in 2019, are rated BBB-plus by Standard & Poor’s.

The economic calendar was light yesterday.

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