Muni yields firm yet again; California brings $3.28 billion, preps $1 billion sale for Monday

By Sheri Kasprzak

New York, Nov. 19 - Municipal yields were seen firmer again on Friday with investors seeking out bargains in the secondary market, said market insiders.

"It's pretty busy today," said one trader.

"There's a lot of interest after the sell-off, so there are bargain hunters flocking to [secondary]. Yields out long are probably down another 10 [basis points]. Elsewhere, anywhere from 5 to 10."

Meanwhile, the State of California continued to dominate primary action, pricing $3.275 billion of general obligation bonds on Friday and gearing up to bring another $1 billion of tax-exempt G.O. bonds on Monday.

Friday's offering included $3.025 billion of Build America Bonds and $250 million of taxable bonds, said Tom Dresslar, spokesman for the state treasurer's office.

The Build America Bonds are due 2020 to 2021 with term bonds due 2026, 2030 and 2040. The coupons range from 5.6% to 7.7% with yields from 5.581% to 7.669%. The taxable bonds are due Nov. 1, 2015 and have a 3.95% coupon to yield 3.805%.

Citigroup Global Markets Inc. was the senior manager for the bonds (A1/A-/).

Retail investors, Dresslar said, purchased $205.8 million of the bonds. The deal was upsized from $2 billion due to strong institutional demand for the bonds, Dresslar noted.

"The BABs program is a success story, and this sale provides yet another illustration," said Dresslar.

Proceeds will be used to finance a wide range of public works projects, including schools, children's hospitals, housing, flood protection, stem cell research, air and water quality protection, libraries, prisons, veterans' homes and parks, said Dresslar.

California preps another sale

Coming up on Monday, the state will return to the market with $1 billion of series 2010 various-purpose tax-exempt G.O. bonds, said Dresslar.

The bonds (A1/A-/) will be sold through RBC Capital Markets Corp.

Proceeds will be used to finance capital projects.

MTA sets $755 million deal

Also ahead during the coming week, the Metropolitan Transportation Authority of New York plans to price $755 million of series 2010D transportation revenue bonds (A2/A/A+) Tuesday following a retail order period on Monday, according to a sales calendar and a preliminary official statement.

The bonds will be sold on a negotiated basis with Citigroup and J.P. Morgan Securities LLC as the joint bookrunners. The co-senior managers are Ramirez & Co. Inc. and Siebert Brandford Shank & Co. LLC.

Proceeds will be used to retire the authority's series CP-1 transportation revenue bond anticipation notes.

The New York City-based authority manages and operates the city's public transportation system.

Ohio plans deal

In other upcoming deals, the State of Ohio is set to sell $300 million of series 2010 higher education G.O. bonds through Huntington Investment Co. and Barclays Capital Inc. on Tuesday, said a sales calendar.

The sale includes $82.255 million of series 2010D tax-exempt bonds and $217.745 million of series 2010E Build America Bonds.

The 2010D bond are due 2012 to 2018, and the 2010E bonds are due 2019 to 2030.

Proceeds will be used to fund capital needs for state-supported higher education facilities.

Urban Development sale ahead

Looking out on the horizon, the New York State Urban Development Corp. plans to price $1.105 billion of series 2010 state personal income tax revenue bonds, said a preliminary official statement.

The offering includes $427.18 million of series 2010A tax-exempt bonds, $328.375 million of series 2010B taxable bonds and $349.33 million of series 2010C Build America Bonds.

Citigroup is the senior manager for the 2010B and 2010C bonds, and Morgan Stanley & Co. Inc. is the lead manager for the 2010A bonds.

Proceeds will be used to finance capital improvements and equipment purchases for state agencies and the City University of New York.

Based in Albany, the corporation provides funding for economic development projects throughout the state.

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