Municipals close mixed as market cranks up following holiday; New York City Water preps sale

By Sheri Kasprzak

New York, Jan. 18 - As the market got back down to business following the Martin Luther King Jr. Day holiday, long bonds got a much-needed boost while short bonds took a hit, traders reported.

"Out long, past 30 years, yields are down by maybe 5 basis points," said one trader.

"Shorter maturities are weaker though, probably by 3 to 5 basis points. We're pretty much all over the place today. It's been fairly quiet in trading."

Another trader reached during the session said the slow activity and a sense of hesitancy by retail investors could be putting a damper on the market.

"Also, we're coming off of a holiday, so that always impacts trading. It's been slow. Retail has turned away from the market, so that's not helping us any. It's a volatile market, and those things happen. I'm sure retail will come back."

All may not be lost for retail investors.

"[Municipals-to-Treasuries] ratios moved higher, topping 100% in most maturities, so we may see some so-called crossover buying next week," said Alan Schankel, managing director with Janney Montgomery Scott LLC.

"Investors such as pension funds, which do not benefit from tax-free income, will often purchase tax-free bonds if the tax-free yields are above available taxable yields, as evidenced by ratios above 100%, with an exception of reversing the trade when ratios fall back below 100% or revert to past levels."

Meanwhile, the week ahead will prove to be quiet, with less than $4 billion of new offerings slated to price, according to Schankel.

Greenwich sells bonds

Moving to light pricing action on Tuesday, the Town of Greenwich, Conn., brought $63 million of series 2011 general obligation bonds and G.O. bond anticipation notes, said a pricing sheet.

The offering includes $30 million of series 2011 G.O. bonds and $33 million of series 2011 G.O. BANs.

The bonds were sold competitively, but calls to the issuer for the winner were not returned by press time.

The G.O. bonds are due 2012 to 2031 with 2% to 5% coupons. The BANs are due Jan. 26, 2012 and have a 1.5% coupon priced at par.

Proceeds will be used to finance capital projects.

New York water sale ahead

Looking to the light primary calendar for the week ahead, the New York City Municipal Water Finance Authority is slated to come to market Wednesday with $450 million of series 2011EE water and sewer system second general resolution revenue bonds through Jefferies & Co.

The authority plans to use the proceeds from the sale to finance improvements to its water and sewer system and to repay commercial paper notes.

Washington to price

Also coming up on Wednesday, the State of Washington is expected to come to market with $445.625 million of series 2011 G.O. bonds competitively. Montague De Rose & Associates LLC is the financial adviser.

The offering includes $355.125 million of series 2011B various-purpose G.O. bonds and $90.5 million of series 2011T-2 taxable G.O. bonds.

The 2011B bonds are due 2012 to 2036, and the 2011T-2 bonds are due 2012 to 2020.

Proceeds will finance capital projects.

Chicago plans airport deal

Out on the horizon, the City of Chicago announced plans Tuesday to price $998.855 million of bonds for the Chicago O'Hare International Airport.

The offering includes $417.04 million of series 2011A passenger facility charge non-AMT revenue bonds, $43.58 million of series 2011B passenger facility charge non-AMT revenue refunding bonds, $127.065 million of series 2011C passenger facility charge AMT revenue refunding bonds and $411.17 million of series 2011A grant receipts and subordinate-lien passenger facility charge revenue bonds, according to a preliminary official statement.

Citigroup Global Markets Inc. and Siebert Brandford Shank & Co. LLC are the senior managers for the offering.

Proceeds from the sale will be used to make capital improvements at the airport, refund grant anticipation bonds and commercial paper notes and make debt service payments.

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