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.
Calif. Market Close: Long Tax-Exempts Rebound As Cal Prices $10B of Rans – Bond Buyer
California Pays More For New Notes As Muni Market Stabilizes – WSJ
California Shrinks Planned Tax-Exempt Sale, Expands Taxable – Bond Buyer
California Bond Woe Bodes Ill for States – WSJ