Yields hold steady ahead of Thanksgiving; New York Urban Developments preps $1.1 billion deal

By Sheri Kasprzak

New York, Nov. 24 - Municipal yields were largely unchanged as the market prepared to shut down for the Thanksgiving holiday, market insiders reported.

"There's nothing going on," said a trader reached early in the afternoon.

"Things will wrap up early today. Everything is basically flat now, and I don't expect that to change."

Although the week was a quiet one volume-wise, it gave the market an opportunity to recover, noted Tom Kozlik, municipal credit analyst at Janney Montgomery Scott LLC.

"Municipal market yields continued to fall, led by the 30-year AAA MMD, which is 9 bps lower for the first half of this week, in addition to the 20 bps improvement from the end of last week," said Kozlik.

"Thus far, the markets have taken back the bulk of a 40 bps technical sell-off which kicked off in mid-November."

Meanwhile, primary action will kick off after the holiday with a substantial offering from the New York State Urban Development Corp., which plans to bring $1.105 billion of series 2010 state personal income tax revenue bonds (//AA).

Citigroup Global Markets Inc. will bring the series 2010B and 2010C bonds, and Morgan Stanley & Co. Inc. is the lead for the 2010A bonds. The exact breakdown of the tranches has not been determined.

The corporation plans to use the proceeds to finance capital improvements and equipment purchases for state agencies and the City University of New York.

L.A. Water and Power returns

Just a week after coming to market with $760.2 million of power system revenue bonds, the Los Angeles Department of Water and Power will return to the market during the coming week with $492.71 million of series 2010 water system revenue bonds through J.P. Morgan Securities LLC and Siebert Brandford Shank & Co. LLC.

The power system bonds priced at par on Tuesday. The 2041 bonds have a 7% coupon, and the 2045 bonds have a 6.574% coupon.

The department plans to deposit the proceeds from the water bond sale into a fund for the operation and maintenance of the city's water system.

Texas deal ahead

The Texas Public Finance Authority is another familiar face returning to the market in the coming week. The authority this time plans to price $854.735 million of series 2010 unemployment compensation obligation assessment revenue bonds through Citigroup and Bank of America Merrill Lynch.

The bonds (Aa1/AAA/AA+), just like the $1.1 billion of series 2010A unemployment bonds the authority issued earlier this month, will be used to repay advances made from the federal unemployment trust fund and fund current unemployment benefits.

Citigroup and Bank of America also priced the series 2010A bonds, which are due 2011 to 2017 with 2% to 5% coupons.

The new offering includes $554.735 million of series 2010B bonds, which are due 2018 to 2020, and $300 million of series 2010C bonds, which are due 2020.

Wayne airport sale planned

Also ahead, the Wayne County Airport Authority of Michigan plans to sell $657.765 million of series 2010 airport revenue refunding bonds, said a preliminary official statement.

The deal includes $297.8 million of series 2010A AMT bonds, $9.38 million of series 2010B non-AMT bonds, $322.3 million of series 2010C non-AMT bonds and $28.285 million of series 2010D non-AMT bonds.

The bonds (A2/A/A-) will be sold on a negotiated basis. Siebert Brandford Shank and Citigroup are the senior managers for the 2010A and 2010B bonds. The senior managers for the 2010C and 2010D bonds are JPMorgan and Citigroup.

Proceeds will be used to refund existing debt.

The authority, based in Detroit, operates the Detroit Metropolitan Wayne County Airport and the Willow Run Airport.

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