Munis end week unchanged, but tone stays firm; NYC, Los Angeles USD plan billion-dollar deals

By Sheri Kasprzak

New York, Sept. 25 - Municipals ended a stellar week basically unchanged, but the firm tone continued to prevail, market insiders reported. Meanwhile, the coming week will feature two billion-dollar offerings: one from the City of New York and the other from the Los Angeles Unified School District.

"Really, across the curve, we're not moving by much," said one New York-based trader reached in the afternoon.

"There's a sense of firmness still. It's pretty standard that things get quieter at the end of the week. It's almost de rigueur that the market is going to grind to a halt by Friday."

Another trader said she feels the market was mostly unchanged as well, but she saw lower yields out on the long end of the yield curve.

"Out about 30 years, yields are down by maybe a basis point or so," she said. "It's probably fair to call it unchanged, but there's a tiny bit of improvement."

Among the light activity, Eastern Illinois University's recently priced certificates of participation were moving. The 4.7% 2016 COPs were seen trading near par. The 5% 2017s were also seen at par, as were the 5.45% 2019 Build America Bonds.

New York, Los Angeles USD deals ahead

Looking to the coming week, New York is expected to sell $1.83 billion in series 2010 general obligation bonds, and the Los Angeles Unified School District will come to market with $1.6 billion in series 2009 G.O. bonds.

The New York bonds may be sold cheaply, one sellside source said Friday.

"We're not involved with the deal, but I think the city is having a problem with revenue collection, and that's going to be a big factor. Still, they do have a good rating, so we'll see," the sellsider said.

The city is expected to sell $1.83 billion in three tranches: a $930 million series 2010A taxable tranche, a $700 million series 2010B tax-exempt tranche and a $200 million series 2010C tax-exempt tranche.

Morgan Stanley & Co. Inc. is the senior manager for the negotiated deal.

The Los Angeles Unified School District will sell its $1.6 billion in G.O. bonds through senior managers Citigroup Global Markets Inc. and Goldman, Sachs & Co.

Proceeds will be used to fund the improvement and expansion of classrooms as well as improvements to the district's libraries, restrooms, laboratories, fire system, security system, lighting system and earthquake retrofitting.

Virginia Public School sale planned

Also in the coming week, the Virginia Public School Authority plans to bring to market $438.52 million in series 2009 school financing refunding bonds (Aa1/AA+/AA+). The sale is scheduled to price Tuesday.

Wachovia Bank NA is the senior manager for the offering.

The bonds are due 2011 to 2026.

Proceeds will be used to refund the authority's series 1997 resolution bonds.

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