Los Angeles Unified School District brings $1.58 billion G.O. bonds; market retains firm tone

By Sheri Kasprzak

New York, Oct. 1 - Municipals once again held a firmer tone Thursday as primary action was dominated by a $1.581 billion sale from the Los Angeles Unified School District.

"It's been a good week," one trader said.

"We've seen some interest [in secondary], but I'd say volume is pretty low. Yields today were mostly flat. The long end seems to be improving steadily. You'll probably see yields down by a basis point or so out at 30 years."

Meanwhile, the Los Angeles USD brought to market $1.581 billion in series 2009G, series 2009H and 2009KRY bonds, according to a sellside source associated with the deal reached late Thursday afternoon.

"It's still going on, so I have a few details, but it's going well. Certainly, the rating has a lot to do with that. The pricing has been very reasonable on the bonds that have priced so far."

Moody's Investors Service rates the bonds Aa3.

The sale included series 2009G federally taxable Build America Bonds, series 2009H qualified school construction bonds and series 2009KRY Build America Bonds.

The exact amounts were not immediately available.

The 2009G bonds are due 2013 and have a 3% coupon, priced at par. The 2009H bonds are due in two 2025 tranches. Both tranches have a 1.54% coupon and both are priced at par.

The pricing details for the series 2009KRY bonds had not been released by press time Thursday.

Citigroup Global Markets Inc. was the senior manager for the series 2009G and 2009H bonds. Goldman, Sachs & Co. was the joint bookrunner with Citi for the series 2009KRY bonds.

Proceeds will be used to fund the improvement and expansion of classrooms as well as improvements to the district's libraries, restrooms, laboratories, fire system, security system, lighting system and earthquake retrofitting.

American Municipal brings $470.7 million

Elsewhere, American Municipal Power Inc. of Columbus, Ohio, priced $470.7 million in taxable Build America Bonds and traditional taxable bonds Thursday, said a sellside source connected to the offering.

The deal included $386.6 million in Build America Bonds and $84.1 million in straight taxable bonds.

The Build America Bonds are due 2034, 2034, 2039 and 2043. The first 2034 maturity has a 6.453% coupon, priced at par, and the second 2034 maturity has a 5.953% coupon, also priced at par. The 2039 bonds have a 6.553% coupon, and the 2043 bonds have a 6.053% coupon, both priced at par.

The serial straight taxables are due 2013 to 2019 with term bonds due 2024 and 2028. The yields range from 3.615% to 5.055%, said the sellsider. The 2024 bonds have a 5.355% coupon, and the 2028 bonds have a 5.803% coupon. All of the bonds priced at par.

In reoffering news, the 6.553% 2039s were seen at 6.318% Thursday afternoon. The 6.453% 2034s were seen at 6.252%.

Merrill Lynch & Co. Inc. was the senior manager.

Proceeds will be used to fund American Municipal's share of the Prairie State coal-fired power generation project.

MTA of New York bonds to price

Moving out on the horizon, the Metropolitan Transportation Authority of New York plans to price $596.565 million in series 2009A transportation revenue bonds, said a preliminary official statement.

The deal includes $500 million in series 2009A-1 Build America Bonds and $96.565 million in series 2009A-2 tax-exempt bonds.

The bonds will be sold on a negotiated basis. The senior managers for the 2009A-1 bonds are Citigroup and Merrill Lynch. Ramirez & Co. Inc. and Merrill Lynch are the senior managers for the 2009A-2 bonds.

The maturities have not been set.

Proceeds will be used to fund transit and commuter projects.

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