Municipal yields slide slightly; Tennessee State School Bond Authority brings $244.94 million

By Sheri Kasprzak

New York, Sept. 1 - Municipals kicked off September on a slightly sour note, giving up a couple of basis points across the yield curve, said a market insider.

"It's not that bad, and I don't think it indicates that the firmness we've had recently is about to end," he noted.

"I think it's a lot of things. We've got a holiday weekend coming up, we've had a stock rally today and nothing's trading, so this is all coming together to push yields up a little."

In primary action, the Tennessee State School Bond Authority headlined with its $244.94 million sale of series 2010 higher educational facilities second program bonds.

The offering included $226.925 million in series 2010A tax-exempt bonds and $18.015 million in series 2010B taxable bonds, according to pricing data.

The bonds (Aa1//AA+) were sold competitively with Morgan Keegan & Co. Inc. winning the bid. The true interest cost came in at about 3.33%, said a sellsider familiar with the deal.

"We feel the pricing came where we expected," the sellsider said. "There were a few factors. There's not a lot out there [today], so it had that advantage. Conditions, overall, were very favorable."

The 2010A bonds are due 2011 to 2030 with term bonds due 2035 and 2040. Coupons range from 2% to 5%, and none of the bonds were formally reoffered.

The 2010B bonds are due 2011 to 2031 with term bonds due 2035 and 2040. Serial coupons range from 2% to 4.8%. The 2035 bonds have a 5% coupon priced at 99.293. The 2040 bonds have a 5.2% coupon priced at par.

Proceeds will be used to retire commercial paper from the University of Tennessee at Knoxville, the University of Tennessee at Martin, Middle Tennessee State University, the University of Memphis and Tennessee Technological University.

Huntsville warrants price

Elsewhere, the City of Huntsville, Ala., came to market with $170.515 million in series 2010 general obligation refunding and capital improvement warrants (Aaa) on Wednesday, according to a pricing sheet.

The offering included $81.29 million in series 2010A warrants, $70.01 million in series 2010B warrants, $7.52 million in series 2010C recovery zone economic development bonds and $11.695 million in series 2010D refunding warrants.

Morgan Keegan was the senior manager.

The 2010A warrants are due 2011 to 2027 with term bonds due 2029, 2031 and 2037. The coupons range from 3% to 5%, and none were formally reoffered.

The 2010B warrants are due 2011 to 2027 with a term bond due 2030. Coupons range from 0.610% to 4.759%. The 2011 warrants were not reoffered. The rest were priced at par.

The 2010C bonds are due 2032 and have a 5.209% coupon priced at par.

The 2010D warrants are due 2011 to 2021 with a term bond due 2027. The coupons range from 0.610% to 3.786%, all priced at par. The 2027 bonds have a 4.35% coupon, also priced at par.

Proceeds will be used to refund existing debt and improve public facilities.

Sunrise sells bonds

In other primary news, the City of Sunrise in Florida priced $158.45 million in series 2010 utility system revenue bonds (/AA-/AA), said a pricing sheet.

Morgan Stanley & Co. Inc. was the senior manager.

The offering included $59.535 million in series 2010A bonds, $93.915 million in series 2010B Build America Bonds and $5 million in series 2010C refunding bonds.

The 2010A bonds are due 2016 to 2020 with 4% coupons. The 2010B bonds are due 2030 and 2035 with 5.813% and 5.913% coupons, respectively, both priced at par. The 2010C bonds are due 2011 and 2017 to 2019 with coupons from 3% to 4%.

Proceeds will be used to finance capital projects under the city's five-year plan and to refund the city's series 1993 and 1996 bonds.

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