Flood of supply greeted by lackluster demand; District of Columbia brings $820 million notes

By Sheri Kasprzak

New York, Sept. 28 - Despite the large supply of new issues pricing on Wednesday, investors were less than enthusiastic, sending yields upwards, said market insiders.

Yields were up by as much as 5 basis points for the day, with the 10-year and two-year bonds seeing the worst of it. Ten-year yields were up by 5 bps, and two-year bonds were seen up by 4 bps.

One trader noted that there was little going on in secondary, and the cool reception to primary just made matters worse.

"It has been extremely slow, despite this heavier volume," he said.

Leading up the heavier volume was the District of Columbia's $820 million sale of series 2012 general obligation tax revenue anticipation notes, said a term sheet.

The notes (MIG 1/SP-1+/F1+) were sold competitively.

The notes are due Sept. 28, 2012, have a 2% coupon and priced at 101.696.

Proceeds will be used to finance the city's capital needs for fiscal year 2012 ahead of the collection of taxes.

New York City brings G.O.s

Another big offering for the day came from the City of New York. The city sold $510.495 million of series 2012D-1 tax-exempt G.O. bonds (Aa2/AA/AA), which were downsized from $585 million.

Siebert Brandford Shank & Co. LLC was the lead underwriter.

The bonds are due 2017 to 2034 with a term bond due in 2036. The serial coupons range from 3.5% to 5%. The 2036 bonds have a split maturity with a 4.125% coupon priced at par and a 5% coupon to yield 4.11%.

Proceeds will be used to fund capital requirements.

Los Angeles USD sells debt

Also during the session, the Los Angeles Unified School District came to market with $407.805 million of series 2011A G.O. refunding bonds, said a pricing sheet.

The deal includes $206.735 million of series 2011A-1 bonds and $201.07 million of series 2011A-2 bonds.

The bonds (/AA-/) were sold through Citigroup Global Markets Inc.

The 2011A-1 bonds are due 2012 to 2024 with 2% to 5% coupons, and the 2011A-2 bond are due 2012 to 2023 with 2% to 5% coupons.

Proceeds will be used to refund the school district's election of 1997 series 2003F G.O. bonds and its election of 2002 series 2003A G.O. bonds.

West Virginia University prices

In other news, West Virginia University priced $237.605 million of series 2011 capital improvement revenue bonds (Aa3), said a pricing sheet.

The offering included $187.605 million of series 2011B revenue bonds and $50 million of series 2011C variable-rate revenue bonds.

The 2011B bonds are due 2012 to 2031 with a term bond due in 2036. The serial coupons range from 3% to 5%. The 2036 bonds have a 5% coupon and priced at 105.635.

The 2011C bonds are due Oct. 1, 2041. The bonds bear interest at the weekly rate.

Proceeds will be used to fund improvements to the university's Morgantown campus and refinance outstanding lease/purchase agreements.

Fort Worth details deal

Elsewhere, the City of Fort Worth recently priced $78.325 million of series 2011 drainage utility system revenue bonds competitively with Robert W. Baird & Co. Inc. winning the bid, said the city's treasurer, James Mauldin. The true interest cost came in at 3.69%.

The bonds (/AA+/AA+) are due 2012 to 2029 with term bonds due in 2031 and 2036. The serial coupons range from 3% to 5%. The 2031 bonds have a 4% coupon and priced at par, and the 2036 bonds have a 4% coupon and priced at 99.379.

"We're not required to, but [we] opt to sell competitively in circumstances where we can," Mauldin said in an interview Wednesday.

"What I mean by that is we just had two advance refundings, which are difficult to sell competitively because you have to coordinate with placing the money in escrow. We do those through negotiation. If it's a straight vanilla sale, we do it competitively just to keep things objective."

Proceeds will be used to fund various drainage and erosion projects.

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