New York City Transitional Finance brings $800 million; municipals finish the day unmoved

By Aaron Hochman-Zimmerman and Sheri Kasprzak

New York, July 23 - Municipals ended out Thursday little moved, even as one of the biggest deals of the week came through. Traders saw some appetite in the secondary market, with the middle of the yield curve looking particularly appealing.

"We're really not moving that much today," said one trader. "But what we are seeing [moving] seems to be coming in the middle of the yield curve. Probably 10, 15 years."

Another trader agreed.

"[People] don't want to miss out," said Anthony Shields, a Grigsby & Associates senior vice president. "[The market] is very strong in the 10-year range. On the longer end it's a little weaker."

The appetite has not been appetizing for everyone, he said.

"Some of these yields, you could puke," he said.

Meanwhile, Shields said there was a lot of activity in the market Thursday.

"There's a lot of business going on out there," he said.

At some of the high net worth desks, "they're too busy to look for all the bonds that they need," he said.

They might say: "Get me something, I'm too busy," Shields said.

Even with all of the demand, a lot of money remains on the sidelines, he said.

There are July dividend payments, and Shields said August is a big time for those payments.

NYC TFA prices bonds

In Thursday's pricing action, the New York City Transitional Finance Authority priced $800 million in series 2010A-1 future tax secured bonds, said Ray Orlando, spokesman for the New York City Office of Management and Budget.

The bonds (Aa2/AAA/AA+) were sold through lead manager J.P. Morgan Securities Inc.

The bonds are due 2011 to 2031 with term bonds due 2034, 2036 and 2038. The serials have coupons from 2% to 5% and yields from 0.93% to 4.81%. The 2034 bonds have a 5% coupon to yield 4.98%. The 2036 bonds have a 5% coupon priced at par, and the 2038 bonds have a 5% coupon to yield 5.04%.

Proceeds will be used to fund capital expenditures.

The bonds saw a "significant amount of orders in the 10-year," Shields said.

Yields began at 3.08% and then went to 3%.

"Then they had the nerve to bump it to a 2.99%," he said. "To push it through 3% is telling people to drop and people didn't drop."

Turning eyes to the horizon, "there's a really robust calendar next week," he said, "with all the usual suspects."

"Next week is going to be interesting," he added. "We'll see if they continue to meet the demand."

Vegas deals bonds

In other primary action, the Las Vegas Valley Water District in Nevada priced a $90 million series 2009A Build America Bond (Aa1/AA+/) at a 4.67% true interest cost, according to financial director Cary Casey.

JPMorgan acted as lead underwriter for the negotiated deal.

The bonds carry serial maturities from 2010 to 2040.

Proceeds will be used to construct a third intake to collect water from the Colorado River.

Penn. Turnpike rolls out deal

Elsewhere, the Pennsylvania Turnpike Commission revealed the particulars Thursday on its $956.735 million sale of series 2009B-C subordinate revenue bonds.

The deal included $856.735 million in series 2009B current interest bonds and $100 million in series 2009D capital appreciation bonds, said William Capone, spokesman for the commission.

The 2009B bonds are due 2013 to 2039 with yields from 2.42% to 5.61%. The 2009C bonds are due 2030 to 2033 with 6.25% yields across the board.

The bonds (A2/A-/) were sold through lead manager Citigroup Global Markets Inc.

The TIC came in at 5.45%.

Proceeds will be used to fund transportation grants to mass transit agencies as well as for various turnpike projects.

Indy Bond Bank deal

Looking ahead to the coming week's offerings, the Indianapolis Local Public Improvement Bond Bank is set to bring the largest offering, a $568.715 million in series 2009A waterworks bonds, according to a preliminary official statement. The offering is scheduled to price Wednesday, said a sales calendar.

The bonds (A3/AA-/A-) will be sold through lead manager Morgan Stanley & Co. Inc.

The bonds are due 2011 to 2024 with term bonds due 2029 and 2038.

Proceeds will be used to refund the bond bank's outstanding 2004A, 2005G and 2005H bonds as well as to make a deposit to a reserve fund.

Also on Wednesday, the City of Houston is expected to sell $490.81 million in series 2009 public improvement refunding bonds, said a calendar of sales.

The sale includes series 2009A public improvement refunding bonds and series 2009B public improvement taxable refunding Build America Bonds, but the exact breakdown was unavailable Thursday.

The bonds (Aa3/AA/) will be sold through lead manager Loop Capital Markets LLC.

Proceeds will be used to refund commercial paper notes and existing public improvement bonds.

Philly sale comes Tuesday

Another big deal for the week comes out of the City of Philadelphia. The city is expected to sell its previously announced $240.755 million in series 2009A general obligation fixed-rate refunding bonds Tuesday, said a calendar of upcoming sales.

The bonds (Baa1/BBB/BBB+) will be sold through lead manager Merrill Lynch & Co. Inc.

The bonds are due 2010 to 2031.

Proceeds will be used to refund the city's series 2007B bonds.

Texas floods market

Several upcoming sales come out of the Lone Star State, including a $257.42 million sale of series 2009A state revolving fund subordinate-lien revenue and revenue refunding bonds from the Texas Water Development Board. The deal is scheduled for Tuesday, said a sales calendar.

The sale includes $224.61 million in series 2009A-1 revenue bonds and $32.81 million in series 2009A-2 refunding bonds.

The bonds (Aaa/AAA/AAA) will be sold through lead manager Merrill Lynch and Jefferies & Co.

The 2009A-1 bonds are due 2011 to 2029, and the 2009A-2 bonds are due 2010 to 2017.

Proceeds will be used to reimburse the state revolving fund for its purchase of political subdivision bonds as well as to refund existing bonds.

Also ahead, the Texas Department of Housing and Community Affairs will sell $106.5 million of series 2009A-B bonds (Aaa/AAA/) Wednesday, according to a calendar of upcoming sales.

JPMorgan will act as underwriter for the negotiated bonds.

A term bond will mature in 2040.

School district offerings

Also under the Lone Star, the Lubbock-Cooper Independent School District, Texas, plans to offer $80 million in G.O. building bonds (A3/A+/A) Tuesday, according to a calendar of upcoming sales.

Wells Fargo Brokerage Services LLC will act as underwriter for the negotiated issue.

The bonds will carry serial maturities from 2012 to 2049.

The district is located in Lubbock, Texas.

Meanwhile, another school district, the Spring Independent School District, Texas, plans to sell $57.695 million of unlimited tax adjustable rate schoolhouse bonds (Aa3/AAA/, A1/A underlying), according to a calendar of upcoming sales.

Morgan Keegan & Co. Inc. will act as underwriter for the negotiated deal scheduled to price on Tuesday.

The bonds will carry insurance from Assured Guaranty.

Serial maturities run from 2026 to 2029.

The Spring Independent School District is based in Houston.

Massachusetts water deal

Up north, the Massachusetts Water Pollution Abatement Trust will price $250 million in series 2009 state revolving fund bonds Wednesday, said a sales calendar.

The bonds (Aaa/AAA/AAA) will be sold through lead manager JPMorgan.

The bonds are due 2029.

The full details were unavailable by press time Thursday evening.

Elsewhere, King County in Washington is set to sell $250 million in series 2009 sewer revenue bonds on Monday, according to a deal calendar.

The bonds (/AA+/) will be sold on a negotiated basis with Barclays Capital Inc. as the lead manager. The co-managers are Merrill Lynch, Citigroup and Siebert Brandford Shank & Co. LLC.

The bonds are due 2013 to 2049.

Proceeds will be used to fund improvements to the county's sewer system.

Seattle is the county seat.

North Texas Tollway deal

Looking out on the horizon, the North Texas Tollway Authority plans to price $1,171,320,000 in series 2009 system revenue bonds, said a preliminary official statement.

The sale includes $360.925 million in series 2009A first-tier tax-exempt current interest bonds and $810.395 million in series 2009B first-tier taxable current interest Build America Bonds.

The bonds (A2/A-/) will be sold on a negotiated basis. Morgan Stanley is the bookrunner for the 2009A bond, while Goldman, Sachs & Co. is the bookrunner for the 2009B bonds.

The 2009A bonds are due 2010 to 2013 with term bonds due 2024, 2029 and 2039. The 2009B bonds are due 2049.

Proceeds will be used to refund existing debt as well as construct and improve portions of the tollway system.

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