Muni yields end flat to firmer; New Jersey Transportation Trust Fund preps $1.4 billion sale

By Sheri Kasprzak

New York, Oct. 12 - The municipals market kicked off a shortened week on a firmer note as yields were seen flat to slightly firmer, said one trader reached in the afternoon.

"The middle of the curve might be better by a couple of basis points," he said.

"The rest of the curve is relatively flat. It's been a pretty quiet day, but it's a short week, so I'm not expecting any big swings this week. I think if we move, it will be slight in either direction. We'll probably stay pretty flat."

Meanwhile, the new issue market is stacking up for the coming week, with fewer offerings in the hopper than in recent weeks.

Leading the action will be a $1.396 billion offering from the New Jersey Transportation Trust Fund. The trust fund will bring its series 2010 transportation system bonds to market on Thursday, said a source familiar with the deal.

The sale includes $929.055 million in series 2010C Build America Bonds, $464.455 million in series 2010D bonds and $1.99 million in series 2010E federally taxable bonds.

Barclays Capital Inc. is the senior manager for the bonds (//AA-).

Proceeds will be used to finance capital improvement projects as well as refund existing debt.

Tennessee readies deal

Coming up on Wednesday, the State of Tennessee is ready to come to market with $213.315 million in series 2010 general obligation bonds, said Mary-Margaret Collier, director of the state's Office of State and Local Finance.

"Unless the market is way off tomorrow, we'll expect the lowest TIC," Collier said in an interview.

"We're expecting, based on past sales over the past couple of months, fairly aggressive bids. The state only comes to market once a year with our G.O. bonds."

Collier said that even though the state has no say in whether retail or institutional investors take the bonds after the competitive sale, she's hoping it will be a combination.

"Retail [investors] are typically interested in the short bonds, while institutional will go for the longer maturities," she noted.

The bonds (Aaa/AA+/AAA) will be sold competitively with Public Financial Management Inc. as the financial adviser.

The sale includes $169.55 million in series 2010A G.O. bonds and $43.765 million in series 2010B G.O. refunding bonds.

The 2010A bonds are due 2012 to 2031, and the 2010B bonds are due 2012 and 2019 to 2023.

Proceeds will be used to finance capital projects and retire existing commercial paper.

Chicago BOE deal ahead

Also coming up on Wednesday, the Board of Education of the City of Chicago plans to sell $407.125 million in series 2010 unlimited tax G.O. bonds (Aa2/AA-/A+) through Loop Capital Markets LLC and Siebert Brandford Shank & Co. LLC.

The offering is comprised of $257.125 million in series 2010C qualified school construction bonds and $150 million in series 2010D Build America Bonds.

The proceeds will finance the construction of new schools and the renovation of existing school facilities.

Virginia preps sale

In other sales set for Wednesday, the Commonwealth of Virginia plans to price $168.41 million in series 2010A G.O. bonds, said a notice of sale.

The bonds are due 2011 to 2040.

The bonds will be sold competitively with Public Resources Advisory Group as the financial adviser.

The commonwealth intends to use the proceeds to finance capital projects at various Virginia higher education facilities.

Notre Dame bonds to price

The University of Notre Dame du Lac is expected to bring on Wednesday $160 million in series 2010 taxable fixed-rate bonds, said a preliminary official statement.

The bonds (Aaa) will be sold through underwriters Bank of America Merrill Lynch, J.P. Morgan Securities LLC and Wells Fargo Securities LLC.

Proceeds will be used to finance, refinance or reimburse the university for capital improvements.

The university is located in Notre Dame, Ind.

Delaware deal planned

Looking to the week of Oct. 18, the State of Delaware is readying a $298.825 million offering of series 2010 G.O. bonds, said a preliminary official statement.

The sale includes $123.47 million in series 2010B G.O. bonds, $115.775 million in series 2010C Build America Bonds and $59.58 million in series 2010D qualified school construction bonds.

The bonds (Aaa//AAA) will be sold on a negotiated basis with JPMorgan and Citigroup Global Markets Inc. as the joint bookrunners.

The 2010B bonds are due 2011 to 2024, and the 2010C bonds are due 2019 to 2030. The 2010D bonds are due 2029.

The state plans to use the proceeds to fund capital projects, including new school construction.

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