Munis continue to firm as trading volume picks up; Ohio Water expects to price $225.06 million

By Sheri Kasprzak

New York, Sept. 3 - Municipals continued to experience a firming trend Thursday with the long end of the yield curve seen better by a few basis points.

One trader reached during the afternoon said the drop in primary market activity has been a sort of boon for the secondary market.

"[Secondary] really [was] struggling to make any ground when there were billions out in primary," the trader said.

"When you've got billions in [primary] supply, there's less interest in the secondary market. I've seen quite a bit moving [today]. Volume seems stronger than usual. I can only speak for our desk, but it's been pretty solid."

The trader noted that because there has been so much primary supply, it makes sense that the secondary would be seeing more trades.

On Thursday, the trader said he saw the taxable pension bonds recently priced by the City of Waterbury, Conn., moving in secondary. The 7.089% 2038 bonds were seen at 6.771%. The bonds priced Tuesday at par. The 2.957% 2011s were seen at 2.37% after pricing at par.

In other trading action, the State of Wisconsin's series 2009-1 general obligation refunding bonds were moving. The 4% 2013 bonds were seen at 1.79% after pricing Wednesday at 1.76%.

Week ahead looks light

Primary volume for the week ahead may prove to be light as well. The week's action will be led by a $300 million sale of series 2009A taxable bonds from Novant Health of Winston-Salem, N.C.

The bonds (A1/A+/AA-) will be sold through Merrill Lynch & Co. Inc. and J.P. Morgan Securities Inc.

Proceeds will refinance a revolving credit facility used to pay off debt owed to MedQuest. That deal will come to market Wednesday.

Another major offering also comes out of North Carolina. The North Carolina Municipal Power Agency No. 1 is set on Thursday to price $292.52 million in series 2009 Catawba Electric revenue bonds through Morgan Stanley & Co. Inc.

Those bonds will refund existing debt and terminate a swap agreement.

In the Midwest, St. Joseph County in Indiana is set to sell $150 million in series 2009 educational facilities revenue refunding bonds for the University of Notre Dame du Lac on Wednesday.

The bonds (Aaa) will be sold through Morgan Stanley, and the proceeds will be used to refund the university's series 1998 and 2005 bonds.

Ohio Water sale ahead

Out on the horizon, the Ohio Water Development Authority is expected to price $225.055 million in series 2009 water pollution control loan fund refunding revenue bonds, said a preliminary official statement.

The bonds will be sold on a negotiated basis with Merrill Lynch and Wells Fargo Securities Inc.

The bonds are due 2009 to 2019.

Proceeds will be used to refund the authority's series 2004 and 2005B water quality bonds.

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