Municipals end flat amid light supply; California Public Works brings $460.42 million of bonds

By Sheri Kasprzak

New York, Oct. 3 - Municipals were mostly unchanged at the close of the session Thursday, market insiders said, as a drop in supply and a lethargic Treasuries market offered little to move yields.

"Yields are kind of stagnating," a trader said during the afternoon.

"There's a lot swirling around, but supply is light. Everything we've seen indicates it [the shutdown] won't last long, but it's still too early to tell how much of an impact it might have on munis."

Meanwhile, for the month of September, municipals rallied, said J.R. Rieger, vice president of fixed-income indexes with S&P Dow Jones Indices.

The S&P National AMT-Free Municipal Bond index return 2.19% for the month, even as Puerto Rico bonds continued to pull down the market. The S&P Municipal Bond Puerto Rico index was down 0.66% for the month of September and 16.43% for the year to date.

California Public Works prices

Amid the new issues during the session, the California Public Works Board sold $460.42 million of series 2013 lease revenue bonds, said a pricing sheet.

The offering included $135,995,000 of series 2013F Department of Corrections and Rehabilitation bonds (A2/A-/A-), $161,115,000 of series 2013G Department of Corrections and Rehabilitation bonds (A2/A-/A-) and $163.31 million of series 2013H California State University bonds (Aa3/A-/A-).

The 2013F bonds are due 2014 to 2029 with term bonds due in 2031 and 2033. The serial coupons range from 1% to 5.25% with 0.24% to 4.25% yields. The 2031 bonds have a 4.5% coupon priced at 99.146 to yield 4.57% and a 5.25% coupon priced at 106.424 to yield 4.44%. The 2033 bonds have a 4.625% coupon priced at 99.033 to yield 4.70% and a 5.25% coupon priced at 105.522 to yield 4.55%.

The 2013G bonds are due 2014 to 2033 with coupons from 2% to 5.25% and yields from 0.24% to 4.55%.

The 2013H bonds are due 2016 to 2033 with a term bond due in 2038. The serial coupons range from 4% to 5% and yields range from 0.74% to 4.79%.

The bonds were sold through senior managers J.P. Morgan Securities LLC and U.S. Bancorp Investments Inc.

Proceeds will be used to finance and refinance the construction and improvement of the Calaveras Jail, the San Bernardino Jail, the Shasta Juvenile Rehabilitation Center, the Waco State Prison and California State University.

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