Munis round out day firmer; Port Authority of New York and New Jersey preps $1 billion deal

By Sheri Kasprzak

New York, Sept. 19 - Municipals got off to a great start on Monday, but a little weakness was seen on the short end of the curve, said market insiders.

One trader noted that munis got a push from a Treasuries rally after Treasuries took off on word that Greece might be in danger of defaulting on its debt.

Fifteen-year yields saw the most improvement, dropping more than 6 basis points, said the trader. Shorter bonds were slightly weaker, gaining a basis point or so in spots.

Madison school bonds price

Leading Monday's light primary action, the Madison Metropolitan School District of Wisconsin sold $58.5 million of series 2011 tax and revenue anticipation promissory notes, said a pricing sheet.

The notes were sold competitively.

The notes are due Aug. 30, 2012, have a 2.25% coupon and priced at 101.887.

Proceeds will be used to pay the costs of maintaining and operating the schools within the district throughout the 2011-2012 school year.

PANYNJ preps big deal

Heading up the primary market's upcoming offerings, the Port Authority of New York and New Jersey said Monday that it intends to bring $1 billion of 168th series consolidated bonds.

The bonds will be sold on a negotiated basis with Citigroup Global Markets Inc. as the senior manager, said a preliminary official statement.

The bonds are due Oct. 1, 2051.

Proceeds will be used for capital expenditures related to One World Trade Center as well as other expenditures related to the World Trade Center site.

The authority last sold debt for the World Trade Center in October 2010 when it priced $850 million of consolidated bonds, also through Citigroup. Those bonds were sold in two $425 million tranches. Both the 164th series bonds and the 165th series bonds are due Nov. 1, 2041, have a 5.647% coupon and priced at par.

Market awaits California G.O.s

On Tuesday, the State of California will price its $2.6 billion offering of series 2011 general obligation bonds for institutional investors after a two-day retail order period.

During the first day of the retail order period, yields were seen from 0.67% to 4.58%, according to Tom Dresslar, spokesman for the state treasurer's office.

Dresslar said that yields on the G.O. bonds so far are substantially lower than the rates the state paid the last time it sold G.O. bonds in November 2010. The five-year bonds for the 2011 issue yield 1.61%, compared with 2.66% in 2010, Dresslar said, and the 10-year bonds yield 3.17%, compared with 4.23% in 2010. The 20-year bonds yield 4.58%, compared with 5.28% in 2010, and the 30-year bonds yield 4.8%, compared with 5.5%.

The bonds (A1/A-/A-) are being sold through Bank of America Merrill Lynch and Stone & Youngberg LLC.

Proceeds from the deal will be used to retire commercial paper notes and refund existing debt.

Massachusetts, Ohio deals ahead

In addition to California's large deal, the Commonwealth of Massachusetts and the State of Ohio will be in the market during the week with substantial competitive offerings.

Massachusetts is poised to sell $475 million of series 2011D consolidated loan G.O. bonds (Aa1) on Wednesday.

The bonds are due 2012 to 2028, and proceeds from the deal will be used to finance portions of the commonwealth's capital plan, according to a preliminary official statement.

Also on Wednesday, Ohio is scheduled to price $300 million of series 2011B common schools G.O. bonds, said a preliminary official statement.

The bonds will be sold competitively with Acacia Financial Group Inc. as the financial adviser.

The bonds are due 2012 to 2031.

Proceeds will be used to pay for capital facilities at common schools throughout the state.

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