Munis end week unchanged ahead of massive influx of new issues; $7 billion of offerings ahead

By Sheri Kasprzak

New York, July 15 - After a successful week, the muni market rounded out Friday on a calm note as investors awaited a large supply of new deals in the coming week.

"It's quiet," said one trader reached during Friday's session.

According to Alan Schankel, managing director with Janney Montgomery Scott LLC, that new issuance supply could top $7 billion.

On a broader note, Schankel noted Friday in a report that Moody's Investors Service could downgrade about 7,000 municipal issues directly linked to the United States' Aaa rating.

"These include pre-refunded and escrowed issues secured by U.S. Treasury or agency issues, as well as housing bonds backed by mortgages insured or guaranteed by the U.S. government or agencies such as Fannie Mae and Freddie Mac," Schankel wrote.

"The report [from Moody's] also mentioned less direct but potentially vulnerable Aaa issues, which will be reviewed to determine links and dependence on the federal government."

Oregon to come with TANs

Leading the coming week's primary action, the State of Oregon is set to price $788.06 million of series 2011A full faith and credit tax anticipation notes on Wednesday, said a preliminary official statement.

The notes (MIG 1/SP-1+/F1+) will be sold on a negotiated basis with Citigroup Global Markets Inc. and Bank of America Merrill Lynch as the senior managers.

The notes are due June 29, 2012.

Proceeds will be used to meet seasonal cash needs and cash management requirements from 2011 to 2013.

San Francisco utilities deal set

Also ahead, the Public Utilities Commission of the City and County of San Francisco is scheduled to price $775.57 million of series 2011 water revenue bonds on Thursday, said a preliminary official statement.

The offering includes $634.12 million of series 2011A bonds, $30.39 million of series 2011B bonds, $35.49 million of series 2011C local water main bonds and $75.57 million of series 2011D refunding bonds.

The bonds (Aa3/AA-/) will be sold competitively with Public Financial Management Inc. and Backstrom McCarley Berry & Co. LLC as the financial advisers.

The maturities have not been set.

Proceeds will be used to fund capital projects for the commission's water supply, storage and distribution system and to refund debt.

New York preps G.O. bonds

Another major offering in the coming week is from the City of New York, which is poised to bring $600 million of series 2012A general obligation bonds on Wednesday.

The deal includes $515 million of series 2012A-1 tax-exempt bonds and $85 million of series 2012A-2 taxable bonds, said a preliminary official statement.

The 2012A-1 bonds will be sold on a negotiated basis with Citigroup as the senior manager.

The 2012A-2 bonds will be sold competitively with Public Resources Advisory Group Inc. as the financial adviser.

The bonds are due 2013 to 2039.

Proceeds will be used to fund capital requirements for the city.

Fairfax details deal

Looking to recent primary action, the Fairfax County Economic Development Authority of Virginia priced $99.43 million of series 2011 Wiehle Avenue Metrorail Station Parking project revenue bonds competitively on Thursday, and Bank of America Merrill Lynch won the bid, said Mary Casciotti, assistant county debt manager.

The bonds (Aa2/AA+/) are due 2015 to 2032 with a term bond due in 2034, as previously reported. The serial coupons range from 2% to 5%, and the 2034 bonds have a 4.5% coupon priced at 98.

The true interest cost for the bonds came in at 4.143%.

"There were a total of seven bids with a high bid of 4.446%, which was 30 basis points higher than the winning bid," Casciotti said.

"The second-lowest bid, from Wells Fargo Bank, was 4.144%, or 1 basis point off from the winning bid." Proceeds will be used to finance or reimburse the county for the costs of constructing a parking area in Reston, Va., for the Dulles Corridor of the Washington Area Metropolitan Transit Authority's Metrorail system.

Alexandria prices G.O. bonds

The City of Alexandria, Va., also recently priced bonds. The city sold $70.005 million of series 2011 capital improvement G.O. bonds on Thursday, and Citigroup won the bid, said Laura Triggs, the city's chief financial officer, in an interview Friday.

The bonds (Aaa/AAA) are due 2012 to 2031 with 2% to 5% coupons. The TIC came in at 3.18%, Triggs said.

"We're not required to [go] competitive, but we're pretty much plain vanilla all the time," Triggs said.

"Given our AAA, it gives us the lowest TIC."

Triggs said the city typically comes to market once a year. Last year, the city achieved historically low pricing, with the TIC for its 2010 bonds coming in at 2.93%, but a portion of those bonds were Build America Bonds, she noted.

The proceeds of Thursday's issue will be used to finance capital improvement projects, including public school projects, city parks and buildings, transportation improvements, capital contributions to the Washington Area Transit Authority, infrastructure improvements and maintenance, as well as upgrades to traffic control and information technology.

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