Municipals hold their ground ahead of massive primary flood; Idaho brings $500 million of TANs

By Sheri Kasprzak

New York, June 20 - Municipals closed out a relatively active Monday on a flat note. The market stands ready to price another large wave of primary deals, including a particularly heavy slate of competitive offerings.

"I think it's going to go fine," said one trader of the upcoming deluge of supply.

"We've had a few of these [waves of deals] in the past several months, and it's been well digested before. I suspect there might be a slight bit of pressure on yields but not much."

Alan Schankel, managing director at Janney Montgomery Scott LLC, agreed that the market will likely not have trouble absorbing the new deals.

"The summer months will experience little difficulty absorbing increased new issue levels," Schankel wrote in a report released Monday.

"Reinvestment flows, comprised of proceeds from bonds either maturing or being called through pre-refunding, will top $25 billion in both July and August, likely more than offsetting the volume of tax-free new issues."

In fact, given several factors, Schankel said he feels municipals will remain strong all summer long.

"Non-municipal factors, such as turmoil in Greece and political posturing as we approach the August debt ceiling limit, will move Treasury yields, and munis will follow, although not in lock step," Schankel wrote.

"On a relative basis, we believe the technical convergence of moderate new supply, strong reinvestment demand and flat fund flows will support a strong, pre-Labor Day municipal market."

As for the coming week, Janney municipal credit analyst Tom Kozlik reported Monday that just under $4 billion of negotiated issuance is expected along with a huge push of competitive deals.

Idaho TANs price

Heading up a busy day for municipals, the State of Idaho came to market with $500 million of series 2011 tax anticipation notes, said a pricing sheet.

The notes (MIG 1/SP-1+/F1+) were sold on a negotiated basis through Seattle-Northwest Securities Inc.

The notes are due June 29, 2012 and have a 2% coupon priced at 101.726.

Proceeds will be used to fund capital expenditures for the coming fiscal year ahead of the collection of tax revenues.

According to a letter to investors released by the state, Idaho expects to receive 49.7% of general fund revenue in the first six months of fiscal year 2012. The state also plans to disburse 67.7% of general fund expenditures in the first six months of the fiscal year.

Dallas, Fort Worth fly deal

In other primary news, Dallas and Fort Worth, Texas, priced $111.355 million of series 2011A taxable airport joint revenue refunding bonds for the Dallas-Fort Worth International Airport, said a pricing sheet.

The bonds were sold through Morgan Stanley & Co. Inc. and Morgan Keegan & Co. Inc.

The bonds are due 2011 and 2013 to 2021 with 0.35% to 4.442% coupons.

Proceeds will be used to refund the airport's series 1998 and 1999 airport facility improvement corporation rental car facility charge revenue bonds.

Kentucky building deal set

The week ahead will provide plenty of primary action, mostly of the competitive type, as evidenced by the week's largest deal: a $997.76 million sale of general obligation bonds and G.O. refunding bonds from the State of Georgia. But plenty of negotiated offerings are expected as well.

The Kentucky Property and Buildings Commission is scheduled to bring $362.28 million of series 2011 revenue and revenue refunding bonds Wednesday, said a sales calendar.

The bonds (Aa3//AA-) will be sold through senior manager Citigroup Global Markets Inc.

The offering includes $349.585 million of series 2011A revenue and revenue refunding bonds and $12.695 million of series 2011B revenue bonds.

Proceeds will be used to fund various public economic and community development projects, to refund outstanding obligations and to provide general fund debt service relief in fiscal year 2012.

New York Transitional ahead

Also coming on Wednesday, the New York City Transitional Finance Authority plans to price $300 million of series 2011S building aid revenue bonds competitively, said a notice of sale.

The offering includes $200 million of series 2011S-2A tax-exempt bonds and $100 million of series 2011S-2B taxable bonds.

Public Resources Advisory Group is the financial adviser.

The 2011S-2A bonds are due 2027 to 2040, and the 2011S-2B bonds are due July 15, 2026.

Proceeds will be used to fund qualified school construction projects within the city.

The authority issues bonds and notes for the city's capital projects.

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