Munis finish flat; week ahead offers billions in supply, including $3 billion California sale

By Sheri Kasprzak

New York, Oct. 23 - After the market spent the week fighting off previous losses, municipals rounded out the week unchanged.

"It's pretty quiet today," one sellside source said.

"Yields are mostly unchanged, but we're feeling better than this time last week. Next week looks pretty good [for primary supply]."

Guy LeBas, chief fixed income analyst at Janney Montgomery Scott LLC, reported Friday that yields were largely unchanged at the end of the week due to investor resistance to low yields.

"Despite heavy primary market supply of more than $10 billion, triple-A municipal yields were unchanged this week after investor resistance to low yields led to a two-week muni selloff," LeBas said.

"Next week's new issue calendar is highlighted by $3 billion of California economic recovery bonds with expected ratings of A1/A+/A; bonds are payable from sales taxes, but also possess a State of California (Baa1/A/BBB) guarantee."

The California sale will be conducted through senior manager Barclays Capital Inc., and proceeds will refund existing economic recovery bonds.

New York Water Finance to price

Also ahead during the coming week, the Bay Area Toll Authority in California is expected to price $1.3 billion in series 2009 Build America Bonds (Aa2/AA/AA) through Citigroup Global Markets Inc.

That sale is planned for Wednesday.

Proceeds will fund transportation improvements.

Also coming to market on Wednesday are $500 million in series 2010 water and sewer system second general resolution Build America Bonds from the New York Water Finance Authority.

Those bonds will be sold through Barclays, and proceeds will fund capital improvements to the city's water and sewer system.

Southern California power deal planned

Out on the horizon, the Southern California Public Power Authority plans to price $139.9 million in series 2009A Linden Wind Energy Project revenue notes, said a preliminary official statement.

The bonds (MIG 1/SP-1+/) will be sold on a negotiated basis with Morgan Stanley & Co. Inc. as the senior manager.

The bonds are due Oct. 1, 2010.

Proceeds will be used to provide interim financing for the acquisition of the Linden Wind Energy Project in Goldendale, Wash.

The authority is based in Pasadena, Calif.

Also ahead, the Indiana Finance Authority is expected to price $175.715 million in series 2009A state revolving fund program bonds, said a preliminary official statement.

The sale includes $145.395 million in series 2009A-1 tax-exempt bonds and $30.32 million in series 2009A-2 Build America Bonds.

The bonds (Aaa/AAA/AAA) will be sold through lead managers Citigroup and Merrill Lynch & Co.

Proceeds will be used to provide loans for eligible projects and to refund existing debt.

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