Allegheny Energy prices $235 million revenue bonds; New York State Thruway plans $700 million

By Aaron Hochman-Zimmerman and Sheri Kasprzak

New York, June 26 - Municipals rounded out the week mostly unmoved Friday with one trader reporting that there was "little interest" in the market.

"It's hard to explain the market," a senior trader said. "We've really retraced the percentages," which has left little interest in the market.

The AAA scale stands at nearly 75% of the 10-year Treasury, he said, after seeing recent highs in the 90% range.

The trader saw "continued inflows" into municipal bonds, but the real interest is likely to return if municipals move closer to Treasuries.

"As long as we stay at 95%, I think there's going to be interest," he said.

Generally, "there's a lot of apathy," he said, and "the July [dividend] money was a disappointment."

Where there has been trading, "there is more activity inside the 10-year range than beyond," although "the long end seems more attractive to me."

The market was too quiet to really establish a strong pattern, but "there is a degree of firmness," he said.

Elsewhere, another trader said he felt the market was still holding up with light trading.

"We're still feeling pretty firm," he said. "Not a lot going on, but the tone is firm."

Allegheny Energy bonds

In primary action Friday, the Pennsylvania Economic Development Financing Authority priced $235 million in unsecured 7% tax-exempt facilities revenue bonds for Allegheny Energy Supply Co. LLC, according to a statement from the company.

The bonds (//BBB-) are due July 15, 2039.

Proceeds will be used to fund a portion of the pollution-control equipment and solid waste disposal facilities at Hatfield, Pa.'s Ferry Power Station.

The corporate headquarters of Allegheny Energy Supply are located in Greensburg, Pa.

Bayou bonds

Louisiana priced $60.625 million series 2009A-4 taxable gasoline and fuels tax second-lien revenue bonds (Aa3/AA/) at par to yield Libor plus 250 basis points on Thursday, according to Whit Kling, director of the state bond commission.

The indexed-rate Build America Bond matures on May 1, 2043 and is subject to a tender option on July 1, 2013.

The deal went "exceptionally well," Kling said, although the timing of the sale was forced by the impending expiration of the authorization to issue.

The original authorization of $485 million was fractured into four pieces, he said, which took time to process.

An extension was granted by the legislature, but that mandate was due to expire on July 1.

Citigroup Global Markets Inc. acted as underwriter for the negotiated deal.

Proceeds will make up a piece of $2.2 billion in planned borrowing, which will contribute to the total cost of $5.2 billion for various road and bridge refurbishment projects.

All of the projects are related to Mississippi River bridges and have been designated as "priority projects" by the legislature, Kling said.

New York thruway bonds

Looking to the upcoming week's action, the New York State Thruway Authority plans to bring to market $700 million in series 2009A general revenue bond anticipation notes, said a preliminary official statement. It may be the largest sale in what might be a very quiet week otherwise.

Pricing is expected, according to a sales calendar, for Wednesday.

The notes (MIG 1/SP-1+/) will be sold through Citigroup and M.R. Beal & Co.

The notes are due July 14, 2011.

Proceeds will be used to fund the authority's multiyear plan and make a deposit to a maintenance service fund.

Maine Municipal Bond Bank

Also ahead, the Maine Municipal Bond Bank plans to price $105 million in series 2009A transportation infrastructure revenue bonds, said a preliminary official statement. Pricing is expected for July.

The bonds (/AA/AA-) will be sold through lead managers Citigroup and Wachovia Bank.

The bonds are due 2010 to 2023.

Proceeds will be used primarily to replace, renovate, improve and construct bridges throughout the state. The remainder will be used to refund the bond bank's series 2008A bonds.

Secondary trading light

Moving to the secondary market, traders said volume was very light as the week drew to a close, while the tone remained firm.

In specific trades, the Port of Los Angeles' recently priced series 2009A revenue bonds were moving. The 3% 2011s were seen at 1.65%, and the 3.25% 2012s were trading at 2.05%. The 4.75% 2015 bonds were seen at 3.26%.

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