Munis close out week unchanged to slightly weaker; University of Texas preps $543 million sale

By Sheri Kasprzak

New York, Sept. 10 - Municipal yields were unchanged to higher on Friday with most of the losses seen on the short end of the yield curve, a market insider reported.

"Ten-year bonds are taking the worst of it," he said.

"Not a lot of movement for long bonds today. They're pretty flat, but 10-years are up maybe 2 basis points or so. Short bonds are the ones that had the most to lose, though, since they made the most gains in the first place."

Even though the past week was slow, things are picking up on the primary calendar, Janney Montgomery Scott LLC managing director Alan Schankel said Friday.

Thirty-day visible supply was reportedly inching toward $7 billion, said Schankel.

"It was a slow week in Muniland, as tax-free yields continued to slide Thursday in concert with Treasuries," Schankel noted.

"Focus is shifting to next week's calendar. ... With the passage of legislation to extend BABs unlikely before the election, we expect issuers to embrace BABs, locking in the 35% interest subsidy before it is lowered or disappears. New issue supply next week is dominated by BABs with at least six deals on tap totaling almost $3 billion."

U of Texas readies sale

Heading up Tuesday's primary calendar will be a $543 million offering of series 2010 revenue financing system Build America Bonds from the Board of Regents of the University of Texas System.

The bonds (Aaa/AAA/AAA) will be sold on a negotiated basis with J.P. Morgan Securities Inc. as the senior manager.

Proceeds from the deal will be used to refinance approximately $21.3 million in outstanding tax-exempt commercial paper notes and fund various capital improvement projects.

The university system is based in Austin, Texas.

Texas transportation deal set

Looking out on the horizon, the Texas Transportation Commission is expected to bring to market $1 billion in series 2010 Texas highway general obligation bonds, said a preliminary official statement. Calls to the issuer for comment were not immediately returned Friday.

The bonds (Aaa/AA+/AAA) will be sold through JPMorgan.

The sale is expected to include both Build America Bonds and tax-exempt bonds.

Proceeds will be used to pay for or reimburse the state for highway improvement costs.

The commission, based in Austin, constructs, maintains and repairs the state's highway system.

Illinois Finance deal ahead

Also coming up, the Illinois Finance Authority plans to price $204.1 million in series 2010 revenue bonds for the Admiral at the Lake project, said a preliminary official statement.

The sale includes $125.6 million in series 2010A bonds, $5.35 million in series 2010B bonds, $5 million in series 2010C accelerated redemption reset option securities, $12.15 million in series 2010D-1 tax-exempt mandatory paydown securities, $18.15 million in series 2010D-2 tax-exempt mandatory paydown securities, $35.35 million in series 2010D-3 tax-exempt mandatory paydown securities and $2.5 million in series 2010E taxable mandatory paydown securities.

The bonds will be sold through Ziegler Capital Markets.

The maturities for the 2010A bonds have not been set. The 2010B bonds, 2010C bonds and 2010D-1 bonds are due May 15, 2018. The 2010D-2 bonds and 2010D-3 bonds are due May 15, 2017. The 2010E bonds are due May 15, 2016.

Proceeds will be used to design, acquire, construct and equip a new independent and assisted living facility for senior citizens at the site of the current Admiral at the Lake facility, which is located in Chicago.

Based in Chicago, the authority provides financing for a variety of projects for businesses, nonprofit organizations and local governments.

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