New issue calendar becomes more crowded; MBIA's woes may not be over

By Sheri Kasprzak

New York, Dec. 11 - Following last week's light new issue calendar, this week's slate of deals is growing, with a notable number of larger bond offerings up for pricing.

The sizable offerings set to price in the middle of the week are led by a $600 million offering of general obligation bonds from the City of New York, which is expected to price Wednesday. The maturities on those bonds range from 2009 to 2027 and the price talk on the yields ranged earlier this week from 3.1% to 4.6%.

"That tends to be the way things are," a sell-sider said Tuesday of pricing activity picking up in the middle of the week.

"Slow at the beginning and ending of the week and then lots of pricings in the middle. The sizes of [offerings] does seem to be getting larger, so I guess that's something. But it's not like a new trend to see this kind of activity."

Other bonds set to price

Also coming up are a $368.23 million issue of bonds from the state of Mississippi and $300 million in Orange County Sanitation District bonds, also set to price Wednesday.

Another deal set to price on Wednesday is an issue of $261 million in bonds from the Maryland Health & Education Authority, as well as an issue of $220 million in Texas Water Development bonds.

On Thursday, an issue of $100 million in Upper Occoquan Sewer Authority, Va., bonds are scheduled to price, along with $94.15 million in New York City Industrial Development Authority bonds.

MBIA may face $4.2 billion in losses

A day after MBIA Inc. said it will come away from a stock sale with Warburg Pincus with $1 billion in additional capital, Barclays released a report saying MBIA may post losses of between $2.3 billion and $4.2 billion related to bonds backed by home equity loans and other loans.

"I really hate to speculate," said one sell-side source on Tuesday when asked how munis will be impacted if MBIA's credit is downgraded by Moody's Investors Service, which has threatened to downgrade the bond insurer. "I think we all know it won't be good but I really don't want to say much other than that."

The news comes just a day after MBIA said it will sell $500 million in shares at $31 apiece to Warburg Pincus and that the investor has agreed to backstop a $500 million shareholders rights offer.

Secondary picks up

Looking to secondary market action, traders said activity did pick up slightly on Tuesday after a few sessions of relatively light trading.

"We are seeing more munis trading, mostly retail though," said one trader reached late Tuesday afternoon. "No huge blocks but better than what we have seen recently. It was pretty quiet late last week and yesterday was really quiet."

Another trader said his desk has seen a few more trades today than last week.

"It's not too bad," he said. "Volume has picked up. I wouldn't say it's been fantastically busy but more than last week."

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