Municipals finish out week unmoved; Dasny heads up overloaded primary calendar for coming week

By Aaron Hochman-Zimmerman and Sheri Kasprzak

New York, June 19 - Municipals were little changed Friday as the week closed out, with secondary volume almost grinding to a halt, traders reported.

"We're looking pretty stable, but nothing is going on today," said one trader reached during the afternoon.

"Next week, we're going to get slammed with new deals, so we'll see how the market reacts. Secondary generally suffers, but this past week was busy and we weren't really hurt that much."

The week in the municipal market was generally positive, with "a few pot holes or whatever," a senior trader said Friday.

"There were a couple of really busy days and a couple really slow ones," he said. "Today was one of the slow ones."

The market's performance "was OK," but "it almost feels like the summer part of it is starting," he said.

In the coming week, the meeting of the Federal Reserve may have more of an effect on the high-grade paper but not the higher-yielding paper that does not as closely follow Treasuries, he said.

The State of California grabbed headlines during the week when the state's Budget Conference Committee voted to include a $1 billion cut of subsidies to local development authorities, said Guy LeBas, chief fixed income strategist with Janney Montgomery Scott LLC.

The move, LeBas said, is an effort to help close the state's $24 billion budget gap.

"According to the California Redevelopment Association, this plan flies in the face of a Superior Court decision that described the state's attempt to use earmarked development funds as being in violation of the state's constitution," LeBas reported.

"In that sense, the Budget Committee's proposal may represent window dressing to create the appearance of a more balanced budget that will later face potential legal challenges."

Statue causes flap

California continues to be a sticky situation, a trader noted, as many are worried about the moral hazard that would follow federal intervention.

Meanwhile, in Sacramento Gov. Arnold Schwarzenegger gave up on conventional methods to motivate the legislature to make severe budget cuts.

In order to encourage a greater degree of fortitude, Schwarzenegger went so far on Friday as to send a metal sculpture of a bull's testicles to Darrell Steinberg, D-Sacramento, president pro tem of the Senate, reports said.

The sculpture was promptly returned to Schwarzenegger's office with a note attached reprimanding him for his joking manner in the face of the budget crisis.

Later, Sacramento found a lighter mood.

"We're not going to be upset," said Alicia Trost, a spokeswoman for Steinburg's office, according to the Los Angeles Times.

"We send each other gag gifts all the time," she added.

Still, the market was further concerned by Moody's, which followed Standard & Poor's lead by placing the state's A2 debt rating under review for possible downgrade.

Dasny leads heavy week

Looking ahead to the week's upcoming deals, the Dormitory Authority of the State of New York will lead a loaded schedule with an $800 million sale of series 2009B state personal income tax bonds (/AAA/AA) on Tuesday.

The bonds are due 2010 to 2039, and proceeds will fund capital projects.

Another big deal set for Tuesday comes from the State of Idaho. The state is set to sell $500 million in series 2009 tax anticipation notes, according to a sales calendar.

The notes (MIG 1/SP-1+/F1+) will be sold through lead manager Seattle-Northwest Securities Corp. and are due 2010.

Proceeds will be used to fund general expenses ahead of the collection of taxes.

Orange County sale ahead

Also ahead this month, the County of Orange in California is set to sell $235.765 million in series 2009 airport revenue bonds, said a preliminary official statement. Pricing, according to the statement, is expected for June.

The sale includes $70.515 million in series 2009A bonds and $165.25 million in series 2009B bonds.

The bonds (Aa3/AA-/AA-) will be sold on a negotiated basis with Citigroup Global Markets Inc. and Morgan Stanley & Co. Inc. as the lead managers.

The maturities have not yet been set.

Proceeds will be used to fund airport facilities and improvements as well as fund a debt service reserve fund.

The county seat is Santa Ana, Calif.

Fresno County deal planned

In other upcoming sales set for Tuesday, the County of Fresno in California plans to sell competitively $95 million in series 2009-10 tax and revenue anticipation notes Tuesday, said a preliminary official statement.

KNN Public Finance is the financial adviser.

The notes (/SP-1+/) are due June 30, 2010.

Proceeds will fund general expenses ahead of the collection of certain taxes and other revenue.

The county seat is Fresno, Calif.

Secondary volume retreats

Moving to the secondary market Friday, traders said volume slowed to a trickle, but some offerings were seen moving

The recently priced series 2009 revenue bonds from the North Central Texas Health Development Authority for the Children's Hospital of Dallas were moving. The 5.75% 2039 bonds were seen trading near par.

Also, the New Jersey Educational Facilities Authority's series 2009A bonds sold for Kean University were also seen moving. The 5.5% 2036s were seen at 5.51%.

In other trades, the Regional Transportation Authority of Illinois's series 2009B working cash notes were seen in action. The 2.879% 2011s were seen at 2.732%.

© 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.