Municipals firm along with Treasuries; Jefferson County deal set; $5.6 billion new deals ahead

By Sheri Kasprzak

New York, Nov. 18 - Municipal yields fell on Monday to kick off a pretty significant week for new issues, which will include a $1.74 billion offering from bankrupt Jefferson County, Ala., market sources said. The new-issue calendar will feature about $5.6 billion of new offerings.

Yields were down 2 basis points to 4 bps in sympathy with Treasuries, which sustained their gains following Congressional testimony from prospective Federal Reserve chairwoman Janet Yellen.

The 30-year Treasury bond yield fell by 4 bps to end at 3.757%, and the 10 year-note yield fell by 3.5 bps to 2.668%. The five-year note fell by 4 bps to 1.312%.

Jefferson deal set

Heading up the large primary calendar is a $1,738,408,714.95 offering of series 2013 sewer revenue warrants from Jefferson County, Ala., which filed for bankruptcy in November 2011.

The offering will be conducted in six tranches: $375 million of series 2013A senior lien sewer revenue current interest warrants, $55,693,095.85 of series 2013B senior lien sewer revenue capital appreciation warrants, $69,308,272.15 of series 2013C senior lien sewer revenue convertible capital appreciation warrants, $750,155,000 of series 2013D subordinate lien sewer revenue current interest warrants, $71,935,073.95 of series 2013E subordinate lien sewer revenue capital appreciation warrants and $416,317,273 of series 2013F subordinate lien sewer revenue convertible capital appreciation warrants.

Citigroup Global Markets Inc. is the senior manager for the offering, the proceeds of which will be used to refund and retire existing sewer revenue bonds and to pay past-due debt service on those refunded bonds.

Fitch Ratings announced last week that it intends to give the bonds BB+ and BB ratings for the senior and subordinate bonds, respectively.

Moody's Investors Service said last week that the new debt will carry less credit risk than the county's outstanding debt because of the "large reduction in principal through the bankruptcy process and establishment of a plan to resume debt services payments."

A second retail order period for the deal was conducted Monday.

PANYNJ bonds planned

The second-largest offering of the week comes from the Port Authority of New York and New Jersey, which is set to price $1,513,575,000 of series 178-180 consolidated bonds through Wells Fargo Securities LLC.

The deal includes $483.44 million of series 178 bonds, $922.74 million of series 179 bonds and $107,395,000 of series 180 bonds.

Proceeds from the deal will be used to refund the authority's series 133 consolidated bonds.

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