Municipals close mostly flat ahead of light primary calendar; Minnesota tobacco deal eyed

By Sheri Kasprzak

New York, Nov. 4 - Municipals rounded out a volatile week mostly unchanged, said market insiders. However, the one weak spot was out long, with 30-year yields seen higher by more than 2 basis points.

One trader noted that the promise of diminished supply in the week ahead took a bit of pressure off the market on Friday.

"Fridays are typically slower anyway," he also noted.

Looking to the coming week's action, Alan Schankel, managing director with Janney Montgomery Scott LLC, said the primary calendar will likely total around $5 billion, roughly half of this week's issuance.

One major deal out on the horizon that stood out for Schankel is Minnesota's Tobacco Securitization Authority's planned $787.57 million offering, which is scheduled to price during the week of Nov. 14.

"Like a $1.5 billion Railsplitter [Illinois] issue of a year ago, this issue will have a stronger structure than the turbos of past deals," Schankel wrote in a report released Friday.

"Minnesota is not a signatory to the Master Settlement Agreement but has its own agreement with cigarette manufacturers similar to the MSA."

Tobacco deal set

The tobacco bonds (/A/BBB+) will be sold via negotiation with Barclays Capital Inc. leading the syndicate.

The offering includes $81.075 million of series 2011A taxable bonds, which are due 2014 to 2015, and $706.495 million of series 2011B tax-exempt bonds, which are due 2016 to 2026 with a term bond due in 2031.

Proceeds will be used to refund existing tobacco settlement bonds.

Ohio Water bonds on tap

Looking to the coming week's offering, the Ohio Water Development Authority is slated to bring $150 million of series 2011 water pollution control loan fund revenue bonds.

The exact pricing date for the bonds (Aaa/AAA/) has not been set, but pricing is expected during the week.

Proceeds will be used to make a deposit to the authority's fund to provide water pollution control loans to local governmental entities.

New York Liberty bonds ahead

Also coming up, the New York Liberty Development Corp. is set to come to market again, this time with $1,343,500,000 of series 2011 liberty revenue refunding bonds through Goldman Sachs & Co.

The deal includes $1,217,550,000 of series 2011A 3 World Trade Center multi-modal liberty revenue refunding bonds, $11.95 million of series 2011B 3 World Trade Center multi-modal liberty revenue refunding bonds, $112.89 million of series 2011A 3-4 World Trade Center multi-modal liberty revenue refunding bonds and $1.11 million of series 2011B 3-4 World Trade Center multi-modal liberty revenue refunding bonds.

The bonds are due Dec. 1, 2049, and proceeds will be used to refund the corporation's series 2009 liberty revenue refunding bonds.

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