Muni yields drop again; Southern California Public Power brings $514.16 million revenue bonds

By Sheri Kasprzak

New York, Aug. 25 - Municipal yields continued their downward trend on Wednesday, pushed by a continued demand for municipal bonds, said a trader.

"It's a shame there's not more supply because the demand is there," he said.

"It's a case where the demand definitely outweighs the supply, and yields are diving every day. I'm sure we haven't seen the bottom yet. I suspect it will continue for a while."

Meanwhile, heading up primary action, the Southern California Public Power Authority sold Wednesday $514.16 million in series 2010-1 Windy Points/Windy Flats revenue bonds, said a pricing sheet. The deal was slightly downsized from $533.065 million.

The bonds (/AA-/AA-) were sold on a negotiated basis with J.P. Morgan Securities Inc. as the senior manager.

The bonds are due 2011 to 2030 with coupons from 2% to 5%.

The authority intends to use the proceeds to prepay for 11.1 million megawatt hours of wind power generation over a 20-year contract.

The authority is based in Pasadena, Calif.

N.M. loan bonds price

Also on Wednesday, the New Mexico Educational Assistance Foundation brought $176.7 million in series 2010-1A education loan bonds, said a sellside source who saw the deal.

The offering included $96.4 million in series 2010-1A-1 tax-exempt non-AMT fixed-rate bonds and $80.3 million in series 2010-1A-2 tax-exempt non-AMT notes.

"They did OK," said the sellsider. "If you think about it, in this market, if you've got a solid rating, like they do, it's hard to go wrong. But the yields look very good to me."

The bonds (Aaa/AAA/) were sold through Bank of America Merrill Lynch and RBC Capital Markets Corp.

The 2010-1A-1 bonds are due 2011 to 2022 with a term bond due 2024. Coupons range from 3% to 5%, and yields range from 0.45% to 2.91%. The 2010-1A-2 bonds are due 2013 to 2021 with 3% to 5% coupons and 0.74% to 2.64% yields.

Proceeds will be used to refund existing debt issued to finance student loans.

N.H. brings $150 million

In other news, the State of New Hampshire sold $150 million in series 2010 general obligation capital improvement bonds, according to a pricing sheet.

The bonds (Aa1/AA/AA+) were priced competitively with JPMorgan winning the bid for $60 million in series 2010B bonds and Citigroup Global Markets Inc. winning $90 million in series 2010C bonds.

The 2010B bonds are due 2012 to 2020 with 5% coupons. Yields range from 0.25% to 2.13%. The 2010C bonds are due 2021 to 2030 with coupons from 3.5% to 4.5%.

The state plans to finance capital improvements and refund existing bond anticipation notes with the proceeds.

Jacksonville sells bonds

Elsewhere, the City of Jacksonville in Florida sold $100.205 million in a downsized offering of series 2010B special revenue bonds, said a sellside source close to the deal.

The bonds were sold competitively with JPMorgan winning the bid with a 2.28% true interest cost.

JPMorgan was the head of a syndicate winning the bid that also included Alamo Capital and Estrada Hinojosa & Co.

After the deal was resized from $115.83 million, the all-in TIC came out to 2.33%.

The bonds are due 2013 to 2021 with 5% coupons.

Proceeds will be used to finance capital improvements under the Better Jacksonville program, including road resurfacing, drainage improvements, sidewalk construction, landscaping, safety crosswalks, library renovations and environmental cleanup.

Puerto Rico brings $1.18 billion

Also during the week, the Government Development Bank of Puerto Rico brought $1.183 billion in series 2010 senior notes (/BBB/), said an official statement.

The sale included $1.086 billion in series 2010C notes and $96.41 million in series 2010D notes.

The 2010C notes are due 2012 to 2014 and 2017 and 2019. The serial notes have coupons from 3% to 4.25%. The coupon is 5.15% for the 2017 notes and 5.4% for the 2019 notes. The 2010D notes are due 2025 with a 5.75% coupon. All of the notes priced at par.

UBS Financial Services Inc. Puerto Rico sold the bonds on Tuesday.

Proceeds will be used for general corporate purposes, including expanding the bank's investment portfolio and purchasing obligations from the commonwealth.

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