Minnesota reprices bonds in soft market; demand up for lower-rated North Carolina Power bonds

By Cristal Cody

Tupelo, Miss., Sept. 8 - Municipal bonds traded "softer" in line with the drop in Treasuries on Wednesday, a day that saw higher demand for lower-rated bonds, said Alan Schankel, managing director at Janney Montgomery Scott LLC.

The State of Minnesota priced its highly rated bonds on Tuesday but had to reprice the bonds on Wednesday "2 basis points cheaper in some maturities" because of the soft market, Schankel said. "It's a great name, but the benchmark scales were 3 to 5 basis points cheaper."

The state sold $900.6 million in series 2010 general obligation bonds (Aa1/AAA/AAA), which included series 2010D various-purpose refunding bonds and series 2010E state trunk highway refunding bonds. Both tranches were sold with serial maturities from 2011 through 2024.

The deal was upsized slightly. The state originally planned to sell $681.2 million of the series 2010D bonds and $218.48 million of the series 2010E bonds for a total of $899.68 million.

The state priced the bonds with coupons from 1.325% to 5% to yield 1.16% to 2.84%.

RBC Capital Markets Corp. was the senior manager of the negotiated sale.

Proceeds will be used to refund existing debt.

Elsewhere in the primary market, the North Carolina Eastern Municipal Power Agency's lower-rated series 2010A and 2010B revenue refunding bonds (/A-/A-) found their niche on Wednesday.

"That went the other way; there was so much demand for lower-rated bonds because the extra yield actually lowered their rates by about 7 basis points," Schankel said.

The primary market is expected to stay mostly quiet over the remainder of the week.

"There's not a big calendar this week. There's a little more coming next week - at least three BABs deals, so the market is waiting for next week," he said.

Orange County to price

One sale coming up in the week ahead is expected from Orange County, Florida, which intends to price $147.53 million in tourist development tax refunding revenue bonds, according to a notice of sale.

The series 2010 bonds (/A+/AA-) have serial maturities from 2019 through 2024.

The bonds will price via a competitive sale on Tuesday.

Public Financial Management, Inc. and M2 Management, Inc. are co-financial advisers for the deal.

Proceeds will be used to refund all or a portion of the county's outstanding series 1998A tourist development tax refunding revenue bonds and series 1998B tourist development tax revenue bonds.

The county seat is Orlando, Fla.

Lakeland, Fla., plans sale

A second sale in the Sunshine State is planned by the City of Lakeland, Fla. The city intends to bring $82.005 million in capital improvement bonds (Aa3//AA-), according to a preliminary official statement.

The sale includes $50.805 million in series 2010A revenue and refunding bonds, $10.175 million in series 2010B revenue and refunding bonds and $21.025 million in series 2010C revenue bonds.

Goldman, Sachs & Co. is the senior manager of the negotiated sale.

The proceeds will be used to refund outstanding debt and finance various capital improvement projects in the city.

Fulton County to sell

In another sale down South, Fulton County, Georgia, will sell $167 million in G.O. library bonds, according to a preliminary official statement.

The deal includes $24.775 million in series 2010A tax-exempt bonds with serial maturities from 2011 through 2016 and $142.225 million in series 2010B taxable Build America Bonds with serial maturities from 2017 through 2025 and terms due 2030 and 2039.

Citigroup Global Markets Inc., Goldman Sachs and Terminus Securities, LLC are the co-lead managers of the negotiated sale.

Proceeds will be used to finance costs to acquire, design, construct and equip new library facilities.

The county seat is Atlanta.

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