Municipals firm as Treasuries get a boost; San Diego County brings $181.3 million of TRANs

By Sheri Kasprzak

New York, June 1 - Municipal yields got a pick-me-up on Wednesday from improved Treasuries, said market insiders. As stocks took a hit from a lackluster jobs report, Treasuries improved and boosted municipals in turn, said one trader.

Yields on the long end of the curve were better by as much as 4 basis points, said the trader, with intermediate yields seen lower by 2 bps to 3 bps.

The move, said the trader, snapped the muni market out of its recent doldrums.

"I think it's Treasuries, and it's the volume," he noted of the improvement.

"We typically follow Treasuries anyway, but things are picking up as the week moves on [in primary], so that's helping us as well."

The 10-year Treasury note yield dropped by 6 bps to below 3% on Wednesday as stocks fell following reports that companies added fewer jobs than expected in May.

TRANs price

Meanwhile, it's the season of tax and revenue anticipation notes again as issuers take stock of their short-term debt needs for the coming fiscal year, said one market insider.

"It's not all that uncommon for issuers to start as early as now [issuing short-term debt]," said the market source.

Among the TRANs deals priced on Wednesday was a $181.295 million offering of series 2011-12 TRANs from the County of San Diego and the San Diego County School District.

The sale included $50 million of series 2011A notes from the school district, $31.545 million of series 2011B-1 notes from the county and $99.75 million of series 2011B-2 notes from the county.

The 2011A notes are due June 29, 2012 and have a 2% coupon priced at 101.726.

The 2011B-1 notes are due Jan. 30, 2012 and have a 2% coupon. The 2011B-2 notes are due April 30, 2012 and have a 2% coupon. The full pricing details for the 2011B-1 and 2011B-2 notes were unavailable Wednesday evening.

Citigroup Global Markets Inc. was the senior manager for the notes (MIG 1/SP-1+/).

Proceeds will be used to finance capital requirements for the coming fiscal year ahead of the collection of taxes and revenues.

Ventura brings TRANs

Another TRANs deal on Wednesday also came out of California. Ventura County sold $137.855 million of series 2011-12 notes.

The notes (MIG 1/SP-1+/) were sold competitively, but calls to the issuer for the winning bidder were not returned by press time Wednesday evening.

The notes are due June 29, 2012 and have a 2.25% coupon priced at 101.965.

Proceeds will be used to fund general operating expenses ahead of the collection of taxes and revenues.

Houston to sell $450 million

Looking to upcoming offerings, the City of Houston announced plans Wednesday to price $450 million of series 2011D first-lien combined utility system revenue bonds.

The bonds (Aa2/AA/) will be sold on a negotiated basis with Bank of America Merrill Lynch as the senior manager, said a preliminary official statement.

The maturities have not been set, but the bonds are structured to mature serially with term bonds.

Proceeds will be used to extend, construct, improve and repair the city's utility systems as well as to refund its series B commercial paper notes.

Metro Boston deal ahead

Also coming up, the Metropolitan Boston Transit Parking Corp. is set to bring to market $304.23 million of series 2011 systemwide senior lien parking revenue bonds, said a preliminary official statement.

The bonds (A1/A+/) will be sold on a negotiated basis with Citigroup as the senior manager.

The bonds are due 2022 to 2031 with term bonds due in 2036 and 2041.

Proceeds will be used to refund existing corporation debt.

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