Municipal yields remain mostly unchanged; market prepares for nearly $7 billion in new issues

By Sheri Kasprzak

New York, May 10 - Municipals held steady after a wild week, with most of the yield curve unchanged with a touch of weakness in spots across the curve, traders reported.

Meanwhile, issuers will offer up close to $7 billion in new money deals during the week, led by an $811.065 million sale of revenue bonds from the City of Seattle and a $750 million offering from the New Jersey Economic Development Authority.

"There's a lot of hesitancy right now," said one trader.

"Everyone is stepping back and seeing what stocks are going to do. It's a smart move because stocks have been skyrocketing today after that plunge last week. I know it's been quiet here. I'm sure that's true everywhere."

Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott LLC, said Monday that municipal trading was limited as the focus shifted to international pressures, even though municipal-to-Treasury ratios were extremely attractive.

"These elevated ratios provide opportunities for relative value buyers, including tender option bond programs, which may use these ratios as an opening for purchases," LeBas said.

Seattle sets deal

The new issue calendar was stacking up on Monday with Seattle scheduled to bring $811.065 million in series 2010 municipal light and power revenue bonds through Citigroup Global Markets Inc. on Thursday.

The offering includes $207.74 million in series 2010A Build America Bonds, $590.05 million in series 2010B improvement and refunding bonds and $13.275 million in series 2010C taxable recovery zone economic development bonds.

Proceeds will finance capital improvements and refund existing debt.

N.J. school bonds ahead

Elsewhere during the week, the New Jersey Economic Development Authority plans to bring to market $750 million in series 2010 school facilities construction Build America Bonds, said a sellside source familiar with the deal. The sale is scheduled for Wednesday.

The bonds (Aa3/AA-/) will be sold on a negotiated basis with Bank of America Merrill Lynch as the lead manager.

Proceeds from the offering will be used to construct school facilities throughout the state. A portion of the proceeds will be hedged with an existing interest rate swap with Royal Bank of Canada.

The authority, based in Trenton, lends money to qualified corporations and entities.

Virginia board plans sale

Also coming up during the week, the Commonwealth Transportation Board of the Commonwealth of Virginia is set to bring to market $492.67 million in series 2010A transportation capital projects revenue bonds on Wednesday, said a sales calendar.

The bonds (Aa1/AA+/AA+) will be sold competitively with Public Resources Advisory Group as the financial adviser.

The bonds are due 2011 to 2035.

Proceeds from the sale will be used to fund transit capital projects, match federal highway funds and finance highway capital projects throughout the state as well as refund existing debt.

Based in Richmond, the board represents mass transit, seaport, airport and railway users.

U of Chicago to price

On Tuesday, the University of Chicago is expected to price $300 million in series 2010 taxable fixed-rate bonds, according to a sales calendar.

The bonds (Aa1//AA+) will be sold through Bank of America Merrill Lynch.

The bonds are due 2022 to 2024 and 2026 with term bonds due 2030.

Proceeds will be used to finance, refinance or reimburse the university for various capital expenditures.

Alabama to sell

Down South, the State of Alabama is expected to price $190.235 million in series 2010 general obligation bonds on Tuesday, said a preliminary official statement.

The deal includes $80.235 million in series 2010C G.O. refunding bonds and $110 million in series 2010D G.O. capital improvement bonds.

The bonds will be sold competitively with Public FA, Inc. as the financial adviser.

The 2010C bonds are due 2012 to 2021, and the 2010D bonds are due 2013 to 2032.

Proceeds from the sale will be used to fund capital expenditures as well as refund existing debt.

Ohio schedules sale

On the horizon, the State of Ohio is set to sell $215 million in series 2010 major new state infrastructure project revenue bonds, said a preliminary official statement.

The sale includes $97.73 million in series 2010-1 tax-exempt bonds and $117.27 million in series 2010-2 Build America Bonds.

The bonds (Aa1/AA/AA-) will be sold through senior manager Bank of America Merrill Lynch.

The 2010-1 bonds are due 2011 to 2015, and the 2010-2 bonds are due 2016 to 2021.

Proceeds will be used to finance a variety of bridge and highway improvement projects throughout the state.

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