Muni Minute 3/7/16: California's $2.3B GO

In the newest installment of Muni Minute -- The Bond Buyer's 60-second video series that examines a top municipal market story that will impact the coming week -- we take a look at California’s looming $2.3 billion general obligation sale and address several aspects of the deal, including investor opinion on how the state is dealing with its revenue shortfalls, and the potential impact of this week's packed new-issue calendar on the pricing.

WISEMAN: The talk of the primary market this week will be California's $2.3 billion dollar general obligation sale scheduled to price on Tuesday. A states spokesman expects savings of about $288 million on the refunding if they can achieve their hoped for 2.99% through interest cost. One portfolio manager said that the size of the deal isn't expected to cheapen the Californian market. Prices are still expected to be rich because there's a large appetite for California paper. Issuance across all Golden State issuers has been down over the past several years. It will prove a nice entry point for investors with cash. Most people anticipate the deal to do well.

According to another PM, the state has earned respect from investors in the last few years by addressing earlier revenue shortfalls with temporary tax increases and by reducing outstanding debt. Although revenue is still a longer term concern, investors are encouraged that the state is not embarking on a spending binge as fiscal metrics improve. Despite a packed calendar with a minimum of $10 billion estimated the price during the week the increased competition is not expected to dampen buyer enthusiasm. I'm Erin Wiseman and this is the near Muni Minute.