Municipal bonds close out slow session mostly unchanged; Puerto Rico sales tax deal ahead

By Sheri Kasprzak

New York, Nov. 28 - Municipals got back down to business Monday after the extended Thanksgiving holiday, said market insiders. Yields held mostly steady, said one trader, as the market prepares for more supply.

"We're really just waiting to see how we can absorb the supply that's coming this week," he said.

"Yields are holding up OK so far. Not a lot of movement. I would say it's starting to become a pattern. Unless there's some major headlines driving Treasuries, we do tend to stay fairly quiet until the supply hits."

Asked if the market is prepared to handle another massive flood of new deals, another trader said he doesn't see why not.

"So far, so good. I think the supply we've had in the last few weeks has been well absorbed. The demand is there, and it's clear that the supply is doing well in secondary," he said.

The coming week will bring in another $7 billion, more than double that seen during the week before Thanksgiving, said Tom Kozlik, municipal credit analyst with Janney Montgomery Scott LLC.

Puerto Rico deal tops list

Kozlik said the week's action will be led by the Puerto Rico Sales Tax Financing Corp.'s $1.081 billion sale of series 2011 sales tax revenue bonds.

The deal includes $1 billion of senior series 2011C bonds and $81 million of senior series 2011D bonds.

The senior manager for the 2011C bonds is Citigroup Global Markets Inc. The senior manager for the series 2011D bonds is Santander Securities.

Proceeds will be used to redeem or repay prior to maturity some 2006 appropriation debt.

New York Liberty preps sale

Also ahead during the week, the New York Liberty Development Corp. is set to bring $702 million of series 2011 One World Trade Center liberty revenue bonds via J.P. Morgan Securities LLC and Citigroup.

The offering comes on the heels of the corporation's $1.344 billion sale of series 2011 liberty revenue refunding bonds.

That deal, which priced in mid-November, included $1.218 billion of series 2011A Three World Trade Center multimodal liberty revenue refunding bonds, $11.005 million of series 2011B Three World Trade Center multimodal liberty revenue refunding bonds, $112.965 million of series 2011A Three-Four World Trade Center multimodal liberty revenue refunding bonds and $1.035 million of series 2011B Three-Four World Trade Center multimodal liberty revenue refunding bonds.

Each series of bonds matures Dec. 1, 2049.

The series 2011A Three World Trade bonds bear interest at 0.27% and priced at par. The 2011B Three World Trade bonds initially bear interest at the weekly rate.

The series 2011A Three-Four World Trade bonds bear interest at 0.28% and priced at par. The 2011B Three-Four World Trade bonds bear interest initially at the weekly rate.

MTA deal planned

Also out of Manhattan this week, the Metropolitan Transportation Authority plans to offer up $500 million of series 2011D transportation revenue bonds (A2//A) through Ramirez & Co. Inc. and Loop Capital Markets LLC.

Those bonds are due 2012 to 2031 with term bonds.

Proceeds will be used to fund transit and commuter projects for the city.

San Jose to fly $306 million

Another major offering set for the week ahead comes out of San Jose, Calif., which is poised to bring $306.27 million of series 2011 airport revenue bonds on Wednesday.

The sale includes $261.615 million of series 2011B taxable bonds being offered through JPMorgan and $44.655 million of series 2011C non-AMT bonds being offered through Citigroup.

The bonds (A2/A-/A-) will be utilized to refund subordinated commercial paper notes, the proceeds of which were used to fund improvements to the Norman Y. Mineta San Jose International Airport.

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