Municipals finish week mostly unmoved; California School Cash Reserve to bring $576 million

By Aaron Hochman-Zimmerman and Sheri Kasprzak

New York, June 5 - Municipals finished Friday mostly unchanged ahead of a week that will continue the trend of heavy primary action.

After experiencing some weakness early in the week, the latter part of the week was mostly flat, bond traders noted.

"We've been pretty flat for the majority of the week," said one trader reached in the early afternoon Friday.

Treasury yields reached nearly 4% early in the session Friday on reports that fewer jobs were lost than expected in May.

"I don't know what to say," a senior trader said. "They did recover a bit [toward the close]."

Some of the only movers were the high-yielding bonds, which were still tightening, he said.

"We've even sold some rated ones at premiums that show desperation for product," the trader noted.

"It's isolated," he said about the demand for rated credits, but often "the isolated ones become the rule after a while."

The new week's calendar seems slightly more robust.

"There's a little bit next week," he said. "We'll probably see continued tightening from here."

Leading the coming week's action is a $616.535 million offering of series 2009 general obligation and G.O. refunding bonds from the Hawaii.

The bonds will be sold through Citigroup Global Markets Inc. and Merrill Lynch & Co. Inc.

Proceeds will refund several of the state's outstanding bonds and fund capital improvements.

The deal includes $400 million series 2009DQ G.O. bonds and $216.535 million in series 2009DR G.O. refunding bonds.

California school bonds ahead

Another large sale for the week ahead comes from the California School Cash Reserve Program Authority. During the week, the authority is scheduled to price $576.215 million in series 2009 senior and subordinate bonds, according to a calendar of upcoming sales.

The deal includes $518.59 million in series 2009A senior bonds and $57.625 million in series 2009A subordinate bonds.

The bonds (MIG1/SP-1+/) will be sold through senior manager Piper Jaffray & Co.

The senior bonds are due 2009 to 2010, and the subordinate bonds are due 2010 to 2019.

Proceeds will be used to fund school programs throughout the state.

Kansas Development sale

Coming up on Wednesday, the Kansas Development Finance Authority is scheduled to sell $333.805 million in series 2009C hospital revenue bonds for Adventist Health System/Sunbelt Obligated Group, according to a calendar of sales.

The bonds (A1/A+/AA-) will be sold on a negotiated basis with Ziegler Capital Markets as the senior manager.

The bonds have a final maturity in 2038.

Proceeds will be used to refund a portion of Adventist's existing variable-rate demand bonds.

Another big sale for the week comes from the Board of Regents of the University of Texas System. The board is set on Wednesday to sell $330 million in series 2009B revenue financing system taxable bonds, according to a preliminary official statement.

The bonds (Aaa/AAA/AAA) will be sold through senior managers Morgan Stanley & Co. Inc. and J.P. Morgan Securities Inc.

Proceeds will be used to refinance commercial paper notes and fund the cost of campus improvements.

Pennsylvania Intergovernmental deal

Coming up on Tuesday, following a retail order period on Monday, is a $372.95 million sale of series 2009 special tax revenue refunding bonds from the Pennsylvania Intergovernmental Cooperation Authority. The bonds will be sold for the City of Philadelphia Funding Program.

The bonds (Aa3/AA/A+) will be sold through senior manager Goldman Sachs & Co.

Proceeds will be used to refund the authority's series 1999 bonds in order to convert the debt from variable rate to fixed rate. The rest will be used to pay a $56 million swap termination fee to JPMorgan Chase Bank.

Pennsylvania Financing to sell $146.71

Also out of Pennsylvania, the Pennsylvania Economic Development Financing Authority announced that it will sell $146.705 million in health system revenue bonds (A3//A-) for the Albert Einstein Healthcare Network, according to a calendar of upcoming sales.

Goldman Sachs will act as underwriter for the negotiated sale, which is scheduled for Tuesday.

The Pennsylvania Economic Development Financing Authority is located in Harrisburg, Pa.

South Jersey Transportation sale

In other upcoming deals, the South Jersey Transportation Authority is expected to sell $188.055 million in series 2009 transportation system revenue bonds on Tuesday, according to a calendar of sales.

The sale includes series 2009A-1 and series 2009A-2 transportation system revenue bonds, series 2009A-5 taxable Build America Bonds and series 2009 subordinated transportation system revenue bonds.

The bonds (A3//BBB+) will be sold through lead manager Merrill Lynch.

Proceeds will be used to fund expressway projects for the authority.

Ohio to bring several

Several offerings for the week ahead come out of the state of Ohio.

The Ohio Air Quality Development Authority plans to issue $241.26 million in series 2009C-D Ohio pollution control revenue bonds (Baa1/BBB/) on behalf of FirstEnergy Generation Corp., according to Darryl Fields, general counsel to the authority.

The bonds are scheduled to price on Tuesday.

Barclays Capital Inc. will act as underwriter for the negotiated sale of the $141.26 million series C bonds, while Merrill Lynch will act as underwriter for the negotiated sale of the $100 million series D bonds.

The series C bonds carry maturities from 2009 to 2018, while the series D bonds carry maturities from 2009 to 2029.

The Ohio Air Quality Development Authority is located in Columbus, Ohio.

The Ohio Water Development Authority announced that it will offer $107.5 million in series 2009A Ohio pollution control revenue refunding bonds (Baa1/BBB/) on behalf of FirstEnergy Nuclear Generation Corp., according to a calendar of upcoming sales.

The sale is expected on Wednesday.

JPMorgan will act as underwriter for the negotiated deal.

The Ohio Water Development Authority is also located in Columbus, Ohio.

Denver to price up to $125 million

The City and County of Denver will issue up to $125 million in G.O. and refunding bonds (Aa2/AAA/AA+) on Wednesday, according to Margaret Danuser, debt administrator.

The city and county are hoping for yields in the area of 4%, Danuser said, but "we'll see where the market is."

The series A G.O. bonds will be sized at $104.5 million, while the series B refunding bonds may be as large as $20.5 million.

RBC Capital Markets Corp. will act as lead underwriter for the negotiated deal. Wachovia Securities LLC, Robert W. Baird & Co. Inc. and Estrada Hinojosa & Co. will act as co-managers.

The bonds are expected to price on Wednesday but will have a retail priority period on Tuesday.

Metro Washington Airport deal

Looking to the horizon, the Metropolitan Washington Airports Authority is expected to bring to market $338.175 million in series 2009C airport system revenue bonds, according to a preliminary official statement.

The bonds (Aa3/AA-/AA) will be sold through senior manager Piper Jaffray. The co-managers are Barclays Capital, Morgan Keegan & Co. Inc., Wachovia Bank, Citigroup, JPMorgan, Loop Capital Markets LLC, Morgan Stanley and Siebert Brandford Shank & Co. LLC.

The maturities for the bonds have not been set.

Proceeds will be used to refund the authority's flexible-term PFC revenue notes and to make a deposit to a debt service reserve fund.

Secondary flattens

Traders Friday said trading action was very light with the tone remaining fairly flat.

"Yields might be slightly better on the long end, but we're basically unmoved," noted one trader.

Among the light action, CPS Energy of San Antonio saw its series 2009C Build America Bonds moving. The 5.985% 2039 bonds were seen at 5.772%.

Elsewhere, the School Board of Broward County in Florida also saw its series 2009A certificates of participation in action. The 5.25% 2027s were seen at 5.166%. The 5% 2025s were seen at 5.05%, and the 5.125% 2026 bonds were seen at 4.935%.

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