Municipals end shortened week firmer; primary bond sales expected to explode in coming week

By Sheri Kasprzak

New York, Sept. 11 - Municipals ended the day with a firmer tone, a trader said, ahead of a busy week for new issues.

"It is really quiet," noted one trader reached in the afternoon. "We're feeling a bit firmer, maybe 2 basis points lower out on the long end. The short end is mostly unchanged."

Among the light trading activity Friday, the New Mexico Hospital Equipment Loan Council's series 2009 hospital revenue bonds sold for Presbyterian Health System were trading. The 5.125% 2035 bonds were seen at 5% after pricing Thursday at par. The 5% 2039 bonds were seen at 5.165%, the same as pricing.

In other trades, the Regents of the University of Texas' bonds sold this week for the Texas Permanent University Fund were moving. The 5.262% 2038 bonds were trading during the afternoon at 5.16% after pricing Thursday at par.

Elsewhere, the city of Waterbury, Conn., saw its recently priced taxable pension bonds moving. The 7.089% 2038 bonds were seen at 6.743%.

Primary market takes off

Looking ahead to the coming week, market insiders said they expect to be deluged with new issues. The influx of new deals has reportedly made it more difficult to buy bonds in the secondary market.

One market source pointed out during the week that with the large number of incoming deals, especially Build America Bonds, investors are finding it more difficult to purchase bonds in the secondary market.

"I would have to agree, to a point," noted one trader reached Friday.

"There is still a market for [municipals] in the secondary market, but it is getting a little harder. It's getting more difficult to buy tax-exempt bonds, for certain."

Anthony Shields, senior vice president with bond dealer Grigsby & Associates, pointed out earlier in the week that the flood of Build America Bonds is making traditional tax-exempts more scarce.

Utah to sell $1 billion

The flood of upcoming sales in the week ahead will be led by a $1.041 billion offering of series 2009 taxable general obligation bonds (Aaa/AAA/) from Utah.

The offering includes $729.545 million in series 2009D taxable G.O. Build America Bonds, which will be sold on Tuesday, and $311.715 million in series 2009C G.O. bonds, which will be sold on Wednesday.

The 2009D bonds are due 2018 to 2024, and the 2009C bonds are due 2010 to 2014.

Proceeds will be used to fund highway improvements and improvements to the higher educational facilities.

Also coming up during the week, the Missouri Highways & Transportation Commission is set to price $600 million in series 2009 reimbursement state road fund bonds (Aa2/AA+/AA+) through lead manager Merrill Lynch & Co. Inc.

The deal includes $341.575 million in series 2009 federally taxable BABs and $258.425 million in series 2009 tax-exempt bonds.

Proceeds will be used to fund the state's bridge improvement program.

Brown University sale planned

Also during the week, Brown University in Rhode Island is scheduled on Wednesday to sell $120 million in series 2009 revenue bonds (Aa1/AA+/) through senior manager J.P. Morgan Securities Inc.

The bonds are due 2010 to 2039.

Proceeds will fund improvements to the university.

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