Muni yields remain mostly flat as market waits for supply; New York Thruway deal approaching

By Sheri Kasprzak

New York, Sept. 1 - Municipals kicked off the month of September much in the same way the market ended August - flat with little activity, traders reported.

"There's nothing moving us," said one trader reached Thursday afternoon.

"No supply, nothing trading. We're supply starved and directionless, essentially. Next week, we're going to see more [volume], but it's not going to be extraordinary."

Meanwhile, the news for most municipals credits is good, said Tom Kozlik, municipal credit analyst with Janney Montgomery Scott LLC.

"The vast majority of municipal credits [have] held [their] ground and not succumbed to doomsday forecasts, as noted in a Moody's report titled 'U.S. Municipal Rating Revisions Through the Great Recession,'" Kozlik wrote in a report Thursday.

"Even though downward rating actions have outnumbered upgrades, the downgrades have been relatively few and mostly limited to one-notch cuts."

Most public finance ratings, Kozlik noted in the report, have held their ground. Since January 2010, less than 6% of the 18,000 municipal credits rated have been either upgraded or downgraded.

Thruway deal coming through

Looking to the coming week's calendar, the market will get back down to business after Labor Day with a $350 million offering of series 2011A state personal income tax revenue bonds from the New York State Thruway Authority.

The bonds will be sold Tuesday through senior manager Siebert Brandford Shank & Co. LLC.

The bonds are due 2012 to 2026, and proceeds from the offering will be used to make grants to reimburse municipalities and other project sponsors for highway, bridge and multi-modal projects.

Indianapolis deal ahead

Another major deal in the week ahead is from the Indianapolis Local Public Improvement Bond Bank, which plans to sell $199.21 million of series 2011K bonds (A1/A/) on Wednesday through J.P. Morgan Securities LLC.

The bonds are due 2013 to 2027.

Proceeds will be used to purchase $180.49 million of series 2011A Marion County Convention and Recreational Facilities Authority bonds and refund existing debt.

Texas plans sale

Looking out on the horizon, the State of Texas is expected to bring to market $91.645 million of series 2011B water financial assistance general obligation bonds, said a preliminary official statement.

The bonds (Aaa/AA+/AAA) will be sold on a negotiated basis with Piper Jaffray & Co. as the lead manager.

The bonds are due 2012 to 2031.

Proceeds will be used to provide grants to local political subdivisions for water infrastructure improvements.

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