North Carolina sells $400 million G.O.s at 0.48%-4.73%; market enjoys best day in 'long time'

By Aaron Hochman-Zimmerman and Sheri Kasprzak

New York, April 16 - The municipals market saw one of its best days in a "long, long time," according to market insiders reached Thursday.

"We had a very strong market today," a trader said.

"We couldn't keep up ... bonds coming in and out. We'd get an offering from a customer and it would trade in a heartbeat. It was one of the strongest days I've seen in a long, long time," he said.

The trader noted that muni bond scales were bumped 10 basis points on the day.

The reason for the memorable rally was harder to pinpoint, he said.

"I was just trying to figure that out myself," he said. "There are those Build America Bonds that are coming to market."

The upcoming Build America Bonds include some from California next week.

As taxable Build America Bonds are poured into the market, issuers "may not be bringing any more tax-exempt," he said.

Even the upcoming New Jersey Turnpike Authority turnpike revenue bonds will have a Build America Bond component, he said.

"There seems to be a lot of that stuff coming," he added.

Another trader, reached earlier in the day, indicated that the improvements started early. The trader, reached in the early afternoon, said the intermediate portion of the yield curve was seen better by about 4 bps with a slightly smaller improvement among long-end bonds.

North Carolina sells $400 million

In primary market action, the State of North Carolina priced Thursday $400 million in series 2009 capital improvement limited general obligation bonds, said Heather Franco, spokeswoman for the state treasurer's office.

The bonds were sold through lead manager Banc of America Securities LLC. The co-managers are BB&T Capital Markets LLC, RBC Capital Markets and Wachovia Securities Inc.

The bonds are due 2010 to 2029 with coupons from 2% to 5% and yields from 0.48% to 4.73%.

In reoffering action, one trader said the bonds stayed fairly close to pricing, with two maturities dropping by 13 bps in secondary trading.

The 2.75% 2015s were seen reoffered at 2.43% after pricing at 2.56%, and the 3% 2017s were reoffered at 2.90% after pricing at 3.03%.

Elsewhere, the 4% 2013s were reoffered at 1.90%, the same as at pricing, and the 3% 2016s were seen at 2.80%, the same as pricing. The 3.25% 2018s were moving in reoffering activity at 3.26%, the same level as pricing.

Proceeds will be used for hospital facility construction and maintenance.

JEA raises $64.31 million

Elsewhere, Jacksonville Electric Authority in Florida priced $64.305 million in series III revenue bonds at a true interest cost of 5.49% (/AA-/AA-) on Wednesday, according to Helen Kehrt, JEA director of treasury services.

The TIC was nearly 20 bps tighter than the authority expected, Kehrt said, who was expecting to pay "in the 5.70% range."

"Yields did come down since last week," she said.

J.P. Morgan Securities Inc. acted as lead underwriter for the negotiated bonds, which carry serial maturities from 2013 to 2029 and term bonds due in 2034 and 2039.

The yields ranged from 2.60% to 5.68%.

Proceeds from the sale will be used to cover construction costs.

Going forward, JEA is watching the market for an opportunity to place a refunding bond, Kehrt said, and may come to market this summer.

Richmond prices $146.5 million

Also this week, Richmond, Va., priced $146.495 million series 2009A public utility revenue bonds with a TIC of 4.774785% (Aa3/AA/AA-) on Wednesday, according to James Duval, city debt and investment manager.

"We were very excited," Duval said.

The retail period opened on Tuesday "and we had planned to roll that into an institutional period on the fifteenth," he said.

However, the "reception on the fourteenth was very good" and all of the bonds were sold, he said.

Morgan Stanley & Co. Inc. acted as lead underwriter for the negotiated deal.

The bonds carry serial maturities from 2012 to 2029 and term bonds due in 2035 and 2040.

Proceeds will be used to reimburse the city for costs to improve the natural gas, water and wastewater system.

Tennessee sale ahead

Moving to upcoming deals, the State of Tennessee is set to sell $367.045 million in series 2009 G.O. and G.O. refunding bonds (Aa1/AA+/AA+) the week of April 20, said a preliminary official statement.

The deal includes $291.5 million in series 2009A G.O. bonds and $75.545 million in series 2009B G.O. refunding bonds.

Morgan Stanley is the lead manager for the sale.

The 2009A bonds are due 2010 to 2029, and the 2009B bonds are due 2010 to 2019.

Proceeds will be used to repay the state's commercial paper notes, which were used to fund capital improvement projects.

Also ahead, the Virginia Public School Authority is set to price $217.575 million in series 2009B school financing bonds, said a preliminary official statement.

The bonds (Aa1/AA+/AA+) will be sold on a negotiated basis Tuesday with Wachovia Securities Inc. and Merrill Lynch & Co. Inc.

The bonds are due 2010 to 2029.

Proceeds will be used to purchase series 2009 local school bonds.

NYC, Beaumont trade

Looking to the secondary market, the City of New York's recently priced series 2009I-1 bonds remained very popular. The 5.625% 2029s were seen at 5.21% after staying relatively unmoved throughout the day.

Also Wednesday, the Beaumont Independent School District in Texas saw its series 2009 school building bonds moving.

The 5% 2038s were seen trading near par. The bonds priced to yield 5.25%. The 5.125% 2031s were seen at 4.95% after pricing to yield 5.2%, and the 5% 2026s were seen at 4.5% after pricing at 4.86%.

The bonds priced Tuesday.

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