Long bonds firm; only $700 million of new issues ahead as Massachusetts readies G.O. deal

By Sheri Kasprzak

New York, Dec. 19 - Secondary was the only game in town Monday as new-issue supply dried up ahead of the upcoming holidays, market insiders reported.

The long end of the yield curve was the most improved, with 30-year yields seen down more than 6 basis points. Other maturities were little moved during the session, said one trader.

"Secondary is seeing a pretty good reception," he said. "We're seeing a fair amount of activity."

The recent supply flood meant there were plenty of bonds to move.

During the trading day, the New York City Liberty Development Corp.'s Four World Trade Center project bonds were moving. The 5% 2044 bonds were seen trading at 4.802%.

Also out of New York, the Empire State Development Corp.'s series 2011A state personal income tax bonds were seen moving in secondary. The 3.5% 2028s were trading at 3.496%. The bonds priced Dec. 13 at par.

In the housing sector, the New York City Housing Development Corp.'s series 2011J-1 revenue bonds were trading. The 4.6% 2036s were seen at 4.3% Monday evening. The bonds priced Dec. 15 at par.

Issuance dwindles

With the upcoming holidays, new-issuance volume has dwindled to a trickle. Tom Kozlik, municipal credit analyst with Janney Montgomery Scott LLC, said negotiated issuance should total just $700 million.

"Municipal market primary market negotiated issuance is much lower than average this week at only about $700 million due to the holidays this week and next week," Kozlik wrote.

"Janney is not expecting to participate in any negotiated issues this week."

Massachusetts deal dominates

One major offering coming up during the fairly quiet week is a $400 million competitive sale out of the Commonwealth of Massachusetts.

The offering should attract plenty of interest, said one sellside source, mostly because it will be one of the few deals on the calendar.

"It's big, it's a strong credit, and there's not much else out there," said the sellsider.

The series 2011E consolidated loan general obligation bonds (Aa1//AA+) will be sold competitively with Public Financial Management Inc. as the financial adviser.

The commonwealth intends to use the proceeds from the sale to finance a portion of its capital plan.

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