Municipal yields end the day flat; District of Columbia brings $342.62 million revenue bonds

By Sheri Kasprzak

New York, Dec. 3 - Municipal yields closed out Friday flat after a week of minor movements, market insiders reported. Meanwhile, the coming week's primary supply will feature a staggering number of Build America Bonds.

"It's a pretty slow session," said one trader. "Everything is fairly quiet, and yields are really flat throughout."

Amid the light trading action, the bonds recently priced by Ohio's American Municipal Power Inc. for the Medahl hydroelectric project were seen moving. The 6.849% 2028 bonds were trading at 6.65% Friday afternoon. The 7% 2035s were seen at 6.87%.

The Northern Illinois Municipal Power Agency's series 2010A BABs were also seen in secondary. The 7.82% 2040s were trading at 7.505%.

Looking at upcoming supply, Alan Schankel, managing director with Janney Montgomery Scott LLC, said tax-exempt supply might be dwindling as the end of the year looms, but taxable supply, especially Build America Bonds supply, will continue unabated.

"Even in the event Congress does crank out some type of BABs extension, the federal interest subsidy rate is likely to be much lower than the current 35%, giving issuers an incentive to sell bonds in 2010 rather than 2011," Schankel said.

"Almost a third of next week's expected $15 billion new issue calendar is in the form of taxable issues with $1.5 billion in New Jersey Turnpike Authority BABs headlining."

Goldman, Sachs & Co. and Citigroup Global Markets Inc. will bring the turnpike bonds to market during the coming week.

Schankel said that despite the new-issue deluge of recent weeks, Build America Bonds spreads have held up well, and absolute yields are the highest since April with the Barclays index at 6.35% and the Wells Fargo index at 6.22%.

D.C. prices bonds

Looking to primary, the District of Columbia sold $342.615 million of series 2010F income-tax secured revenue bonds, said a pricing sheet.

The bonds were sold through Citigroup and Siebert Brandford Shank & Co. LLC.

The bonds are due 2022, 2023, 2026 and 2035. The 2022 bonds have a 4.709% coupon, and the 2023 bonds have a 4.909% coupon. The 2026 bonds have a 5.282% coupon, and the 2035 bonds have a 5.582% coupon. All of the bonds are priced at par.

Proceeds will be used to finance capital projects.

Ragin' Cajun bonds price

Elsewhere, the Lafayette Public Trust Financing Authority of Louisiana sold Thursday $100.05 million of series 2010 revenue bonds for Ragin' Cajun Facilities Inc., said a pricing sheet.

The bonds (/AA+/BBB+) were sold through RBC Capital Markets Corp. and Morgan Keegan & Co. Inc.

The bonds are due 2013 to 2021 with term bonds due 2025, 2030, 2035 and 2041. The serial coupons range from 2% to 5.25%. The 2025 bonds have a 5% coupon priced at 98.452, and the 2030 bonds have a 5.25% coupon priced at 97.116. The 2035 bonds have a 5.5% coupon priced at 97.611. The 2041 bonds have a 5.5% coupon priced at 98.681.

Proceeds will be used to construct student housing at the University of Louisiana at Lafayette and other facilities for the university.

Based in Lafayette, La., the authority provides funding for educational, housing and other nonprofit projects throughout the city.

New York Liberty deal ahead

Moving to upcoming offerings, the New York Liberty Development Corp. is expected to price at least $1.285 billion of World Trade Center multimodal revenue bonds, said preliminary official statements.

The sale tentatively includes $1.219 billion of series 2010A-1 3 World Trade Center project bonds, $6.74 million of series 2010A-2 3 World Trade Center project bonds, $59.4 million of series 2010C World Trade Center project bonds and $600,000 of series 2010D World Trade Center project bonds. The 3 World Trade Center offering might also include series 2010B bonds, but the principal amount has not been determined.

The bonds will be sold through Goldman Sachs and are due Dec. 1, 2049.

Proceeds will be used to reconstruct the World Trade Center towers.

The sale is in addition to the corporation's recently announced offering of $1.308 billion of series 2010 liberty revenue bonds to reconstruct Tower 4 of the World Trade Center. Those bonds will be priced through Goldman Sachs and J.P. Morgan Securities LLC.

Based in New York City, the corporation was founded in 2002 to alleviate joblessness following the terrorist attacks on the World Trade Center.

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