Municipals end flat as Louisiana brings $300 million of G.O. bonds amid light primary supply

By Sheri Kasprzak

New York, March 1 - Municipals kicked off the month little changed as the State of Louisiana's $300 million of general obligation bonds provided some supply in the otherwise quiet primary market.

"I'd call it flat," said one trader reached during the session.

"There's just so little going on, both in secondary and primary, that we're kind of stuck."

The trader said he agreed that once primary supply picks up again, yields will face pressure.

"The reason yields have been improving and holding steady is because there's no supply pressure. At the end of the year [2010], there was this huge explosion of new offerings. Yields were getting hammered because of it. I don't expect to see that kind of pressure this year because BABs are gone, but it would put us under more pressure [if the market gets more supply]," the trader said.

Meanwhile, February saw $16 billion of new bond issuance, slightly above January's pace, reported Alan Schankel, managing director with Janney Montgomery Scott LLC.

Without Illinois' $3.7 billion taxable G.O. issue, February would have had the lowest volume of any month in a decade, Schankel said.

"A JPMorgan report revised earlier predictions for the amount of new issue volume in 2011 to $300 billion, down from a prior $350 billion projection and below 2010's $420 billion," Schankel noted.

Louisiana brings $300 million

Moving to Tuesday's primary action, Louisiana brought to market $300 million of series 2011A G.O. bonds, said a pricing sheet.

The bonds (Aa2//AA) were sold competitively with Barclays Capital Inc. winning the bid.

The bonds are due 2011 to 2030 with 2% to 5% coupons.

Proceeds will be used to fund general government, veterans' affairs, elected officials, economic development, culture, recreation, tourism, corrections, public safety, hospitals, education, legislative and non-state entities expenses.

Calls to the state treasurer's office for the true interest cost were not returned by press time Tuesday evening.

Seattle sells $80.41 million

Elsewhere in the light activity, the City of Seattle priced $80.405 million of series 2011 limited tax G.O. improvement bonds, said a term sheet.

The bonds (Aa1/AAA/AA+) were sold competitively. J.P. Morgan Securities LLC won the bid with a 3.65% TIC.

The bonds are due 2012 to 2031 with coupons from 2.5% to 5%.

Proceeds will be used to finance capital expenditures.

Oyster Bay sale ahead

Moving to Wednesday's primary calendar, the activity will be led once again by a competitive offering, this time from the Town of Oyster Bay, N.Y.

The town will sell $61.575 million of series 2011 G.O. bonds (/AAA/). Fiscal Advisors & Marketing Inc. is the financial adviser.

The bonds are due 2012 to 2020, and proceeds will be used to fund the reconstruction of town buildings, the conservation of parks, beaches and recreation areas and the construction and maintenance of highways.

Clark school bonds planned

Another competitive sale ahead during the week is from Nevada's Clark County School District. The $100.255 million sale, set for Thursday, includes $70.06 million of series 2011A G.O. refunding bonds and $30.195 million of series 2011B G.O. refunding bonds.

The bonds (Aa2/AA/AA-) will be sold with NSB Public Finance as the financial adviser.

The 2011A bonds are due 2013 to 2016, and the 2011B bonds are due 2015 to 2019.

Proceeds will be used to refund existing debt.

The district is based in Las Vegas.

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