Illinois brings $1.25 billion in G.O. certificates at 2%; Texas to sell $5.5 billion in TRANs

By Aaron Hochman-Zimmerman and Sheri Kasprzak

New York, Aug. 20 - As the last of the week's big offerings came to market Thursday, the secondary portion of the market continued to stall.

And the big offerings just keep coming. The State of Texas is expected to sell $5.5 billion in tax and revenue anticipation notes in the coming week.

The State of Illinois priced $1.25 billion in series 2009 general obligation certificates, which diverted attention away from secondary, a trader reported.

"It really has been all about primary this week," the trader said.

"It's probably going to be tough to make any sort of substantial gains until the end of the summer. We're battling against some pretty big deals. The Illinois deal [Thursday] really pulled some people out of the [secondary] market."

The state sold the certificates competitively in three tranches, with J.P. Morgan Securities Inc. taking each tranche.

The deal included $500 million in certificates due March 23, 2010, $250 million in certificates due April 13, 2010 and $500 million in certificates due June 10, 2010.

All three tranches have 2% coupons, priced at par.

The certificates due March 23, 2010 were sold at a true interest cost of 0.77%. The TIC for the April certificates came in at 1.06%, and the TIC for the June certificates came in at 1.15%.

Proceeds will be used to fund general capital expenditures.

Market reacts well to primary

Still, one trader said the market reacted well to most of the deals priced during the week.

"There's nothing that jumped out at me," said Tom Kozlik, Janney Montgomery Scott LLC vice president and municipal analyst, of the offerings that priced during the week.

"There weren't any huge [yield] adjustments. The underwriters understood where the market was."

The bonds were bought up in the same fashion that investors have seen in recent weeks.

"The money continues to be shoved into muni mutual funds," he said. "Although, yields on the short end are really low, and I don't think anyone has an explanation for it."

Texas to bring $5.5 billion TRANs

Moving to the Texas offering, the state plans to price $5.5 billion in series 2009 tax and revenue anticipation notes Tuesday, said a notice of sale. The offering is the largest municipal bond sale of the year.

The notes (MIG 1/SP-1+/F1+) will be sold on a competitive basis with RBC Capital Markets Inc. as the financial adviser.

The TRANs are due Aug. 31, 2010.

Proceeds will be used to fund general capital expenses ahead of the collection of certain taxes and revenues.

Bayside brings bonds

In other primary market news, the South Bayside Waste Management Authority in California priced $53.5 million series 2009A solid waste enterprise revenue bonds (A3/A-/) at a TIC of 5.82732% on behalf of the Shoreway Environmental Center, according to Kevin McCarthy, executive director.

"We are very pleased with the results of the bond sale today," he said.

"The bond proceeds will be used to fund a signature environmental infrastructure project providing enhanced recycling services for over 450,000 residents in San Mateo County," he said.

"The timing of the bond sale was critical to our agency staying on track for initiating project construction to meet future recycling needs for our customer base per new franchise collection agreements starting Jan. 1, 2011," he said.

Banc of America Securities LLC acted as underwriter for the negotiated bonds, which carry serial maturities from 2012 to 2036.

The South Bayside Waste Management Authority and the Shoreway Environmental Center are located in San Carlos, Calif.

Maryland Housing to price

The Maryland Department of Housing and Community Development will issue $91.38 million in residential revenue bonds during the week of Aug. 31, according to the department's web site.

The $58.68 million of series 2007J variable-rate term bonds will mature on Sept. 1, 2031.

The $32.7 million series 2009A bonds will carry serial maturities from 2010 to 2019 and term bonds due 2024, 2029, 2034 and 2039.

Merrill Lynch & Co. will act as lead underwriter for the negotiated bonds.

Proceeds will be used to finance single-family home loans.

The Maryland Department of Housing and Community Development is located in Crownsville, Md.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.