Munis finish week mostly flat; Los Angeles Metropolitan Transportation preps $740 million sale

By Sheri Kasprzak

New York, Oct. 29 - Municipal yields were largely unmoved on Friday as the market got a break from a weeklong new-issue fest, said insiders.

Short and long bonds were unchanged at the end of the session, but intermediate bonds, which crashed midweek, were seen a bit better by about a basis point, said one trader.

"Intermediates have been all over the map this week, but it looks like they might have only dropped by as much as they gained yesterday, probably a basis point. Everything else is quiet and flat," the trader said.

In the coming week, volume will subside somewhat, but several large offerings are planned.

Alan Schankel, managing director with Janney Montgomery Scott LLC, said Friday that municipals were strong after two difficult days, but "muni-to-Treasury ratios remain on the high side."

According to Schankel, the two-year benchmark is especially of note. The tax-free yield is 0.62%, well above the Treasury yield of 0.37%.

"As it stands, next week's new issue calendar is heavy, though below the deluge level of the past two weeks," Schankel noted.

Chicago to price

Chicago will come to market with two deals: $804.285 million of series 2010 general obligation bonds through Loop Capital Markets LLC and Wells Fargo Securities LLC and $486.53 million of series 2010 second-lien water revenue bonds through Cabrera Capital Markets LLC and BMO Capital Markets.

Those deals are scheduled to price just days after Fitch dropped Chicago's G.O. rating to AA- from AA on continued fiscal stress.

The G.O. bonds include $123.155 million of series 2010A G.O. refunding bonds, $213.59 million of series 2010B Build America Bonds and $467.54 million of series 2010C taxable project and refunding bonds.

Proceeds will finance public right-of-way improvements, economic development enhancement projects, transportation improvements and grants to nonprofit organizations.

The water revenue bonds are comprised of $33.565 million of series 2010A tax-exempt bonds, $423.3 million of series 2010B Build America Bonds and $29.665 million of series 2010C qualified energy conservation bonds.

Those proceeds will finance capital improvements and extensions to the city's water system, including the maintenance of city purification plants, the upgrade of various pump stations, the upgrade and replacement of meters and the upgrade and replacement of old grid mains.

L.A. transportation deal ahead

Also during the week, the Los Angeles County Metropolitan Transportation Authority is poised to bring $740 million of series 2010 Measure R senior sales tax revenue bonds (Aa2/AAA/) with Barclays Capital Inc., Citigroup Global Markets Inc. and Goldman, Sachs & Co. as the senior managers.

The proceeds will finance capital transportation projects under the authority's long-range plan.

Rutgers sale planned

In other upcoming sales for the week ahead, Rutgers, the State University of New Jersey plans to bring to market $508.435 million of series 2010 G.O. bonds, said a preliminary official statement.

The sale includes $391.4 million of series 2010H Build America Bonds, $108.635 million of series 2010I tax-exempt bonds and $8.4 million of series 2010J taxable bonds.

Morgan Stanley & Co. Inc. and Bank of America Merrill Lynch are the senior managers for the bonds (Aa2/AA/).

The 2010H bonds are due 2019 to 2022 with term bonds due 2025, 2030 and 2040. The 2010I bonds are due 2012 to 2025 with a term bond due 2029. The 2010J bonds are due 2011 to 2012.

Proceeds will be used to construct and equip improvements at the university's campuses in New Brunswick, N.J.; Camden, N.J.; and Newark.

Love Field bonds to price

Elsewhere, the Love Field Airport Modernization Corp. of Texas is set to sell $310 million of series 2010 special facilities revenue bonds, said a preliminary official statement.

The bonds will be sold on a negotiated basis with Goldman Sachs as the senior manager.

The bonds are due Nov. 1, 2040.

Proceeds will be used to construct and implement improvements to terminal, concourse and ancillary facilities at Love Field Airport in Dallas.

Based in Dallas, the corporation finances projects to enhance the airport to attract tourism and economic development for the city.

Ohio sewer deal set

Also ahead, the Northeast Ohio Regional Sewer District plans to bring to market $338.29 million of series 2010 wastewater improvement revenue bonds on Thursday, said a preliminary official statement.

The bonds (Aa1/AA/) will be sold on a negotiated basis with Barclays and Siebert Brandford Shank & Co. LLC as the senior managers.

The bonds are due 2030 and 2040.

Proceeds will be used to construct, acquire or equip wastewater facilities or water management facilities.

The district is based in Cleveland.

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