After widening 70 bps, long-term California munis rebounded today, tightening as much as 6-10 bps.  California priced $10 BN of Revenue Anticaption Notes (RANs)  paying higher than their initial target price.  Notes from the $2.25 billion Series A-1 mature in May 2011, yielding 1.50% with a 3% coupon. The $7.75 billion Ran Series A-2 matures in June 2011, yielding 1.75% with a 3% coupon.  Sacramento was hoping to sell the RANs with yields of of 1.50% or less.  The state is due to issue $2.75 BN of taxable Build America Bonds on Friday.   California’s structural deficit is becoming a key barometer for global credit issues and should be monitored closely.

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