Build America Bonds return to market, could lift sentiment; swine flu might impact some issuers

By Aaron Hochman-Zimmerman and Sheri Kasprzak

New York, May 1 - Friday sealed the week in municipals with a slightly lower tone and light volume in both the primary and secondary markets.

Even so, insiders said there might be blue skies ahead as the market prepares for another round of Build America Bonds scheduled in the coming week.

"I think we'll do okay in the next week," said one market source reached Friday morning.

"We've got more BABs that will push us. Last time we had them [Build America Bonds], we performed very well."

Among the BABs coming up this week, the Unified School District No. 259 in Sedgwick County, Kan,. is set to bring $132 million in BABs Tuesday.

George K. Baum & Co. will bring the bonds (Aa3/AA/), which are due 2028.

Also coming up, the Johnson County Unified School District No. 233, also in Kansas, is set to price $152.835 million in series 2009 general obligation refunding bonds Thursday, and a portion of those bonds will give investors the option to bid for them as tax-exempt obligations or Build America Bonds.

The deal includes $95 million series 2009A bonds, which may be bid as tax-exempt or Build America Bonds, said a revised schedule.

The deal also includes $22.45 million in series 2009B bonds and $35.385 million in series 2009C bonds.

The 2009A bonds are due 2014 to 2029, 2009B bonds are due 2010 to 2018 and the series 2009C bonds are due 2010 to 2016.

The bonds will be sold on a competitive basis with Springsted Inc. as the financial adviser.

Proceeds will be used to refund existing bonds.

Market has bearish tone

Traders said it's been hard to get a read on the market.

"It's been a funny week and it's been hard to get a handle on it," a senior trader said.

"There's been a bearish tone to it," he said, but still the market always seems to prove its resiliency.

"Every time it looks like it will go lower, it doesn't," he said.

Still, "the MMD has dropped a little bit everyday" this week, he said and "since the AAAs came into tighter relation with Treasuries they are probably going to have to respond" to Treasury weakness.

"I would say we're cautiously optimistic; I wouldn't say we're bearish," he said, but "we've got light inventories."

Next week will be spent, "trying to find a product," he said, but more likely it will come from local mid-west calendars than the national calendars.

Swine flu troubles?

In other municipals news, one sellside source reached Friday said he feels there might be some disruption in the municipals market - particularly for school district bonds - if the swine flu outbreak continues.

"We are seeing [school] districts closing, and that could have a real impact," said the sellsider.

"Obviously, it will likely be a temporary issue. I'm sure that districts that plan to sell bonds will get them done. It's just a matter of when this is going to be contained."

Still, at least one trader reached during the week was less than impressed by the argument.

"We're all not really worried about the flu," the trader said.

So far, the Fort Worth School District in Texas was closed due to the flu outbreak.

Ohio to price bonds

In upcoming deals, the State of Ohio is set to price $155 million in series 2009A turnpike revenue refunding bonds, said a preliminary official statement. The bonds will be sold for the Ohio Turnpike Commission.

The sale is scheduled for Tuesday, according to a sales calendar.

The bonds (Aa3/AA/AA) will be sold through senior managers Morgan Stanley & Co. Inc. and J.P. Morgan Securities Inc. The co-managers are NatCity Investment Inc. and SBK-Brooks Investment Corp.

The proceeds will be used to refund the commission's series 1998 and 2001 bonds.

San Diego sale

In other upcoming offerings for the week, the Public Facilities Financing Authority of the City of San Diego is set to price $442 million in series 2009A senior sewer revenue bonds (A2/A+/AA-) Wednesday, said a calendar of sales.

The bonds will be sold through Banc of America Securities LLC.

The bonds are due 2010 to 2029 with term bonds due 2034 and 2039.

Proceeds will be used to fund capital improvements to the city's wastewater system.

On Tuesday, the Providence Health and Services Obligated Group of Washington State is set to price $250 million in series 2009A direct obligation notes on Tuesday, according to a calendar.

The bonds will be sold through Merrill Lynch & Co. Inc.

Proceeds will be used for general corporate purposes.

Headquartered in Seattle, Providence provides services to Washington State, Montana, Oregon and California.

Mass HEFA offering

On Wednesday, the Massachusetts Health and Educational Facilities Authority plans to price $200 million in series 2009I revenue bonds for Partners Health Care System, said a sales calendar.

The bonds (//AA) will be sold through lead managers J.P. Morgan Securities Inc. and Merrill Lynch & Co. Inc.

The 2009I-1 and 2009I-2 bonds are due July 1, 2044, and the 2009I-3 bonds are due 2013 to 2022 with a term bond.

Proceeds will be used to construct ambulatory care centers.

Also ahead, the Parish of Jefferson in Louisiana is set to sell $160 million in series 2009 sales tax revenue bonds Thursday, said a calendar of upcoming deals.

The deal includes $50 million in series 2009A revenue bonds and $110 million in series 2009B revenue refunding bonds.

The 2009A bonds are due 2009 to 2020 and the 2009B bonds are also due 2009 to 2020.

Proceeds will refund the parish's series 1985, 1986, 1998, 2001, 2002, 2005 and 2007 bonds, as well as construct and repair roads.

Dallas County CCD sale

In other upcoming deals, the Dallas County Community College District of Texas plans to price $110 million in general obligation bonds Monday, said a sales calendar

The bonds (Aaa/AAA/AAA) will be sold on a competitive basis. Southwest Securities Inc. is the financial adviser.

The bonds are due 2010 to 2029.

Proceeds will be used to pay for capital expenses.

Secondary volume slows

In the secondary market, traders said for the third straight session, the market experienced some weakness, and one also noted that volume was fairly light.

Looking at specific trades, the New Jersey State Trust Fund Transportation System's 5.25% 2018s were seen at 4.163%.

The Illinois Finance Authority's DuPage Health System revenue bonds were seen moving. The 5.25% 2039 bonds were seen trading at par.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.