Treasury to support housing finance agencies; Massachusetts Bay authority sells $258.14 million

By Sheri Kasprzak

New York, Oct. 20 - Municipals rounded out Tuesday mostly unchanged amid light secondary market activity. Some primary activity took center stage, led by a $258.14 million sale of sales tax bonds from the Massachusetts Bay Transportation Authority.

Meanwhile, the Obama administration said Tuesday that the Treasury Department will support, on a temporary basis, state housing finance agencies with a New Issue Bond Program and a Temporary Credit and Liquidity Program.

The programs are designed to assist the troubled housing agencies, which have faced hardships as the economy has deteriorated. Housing agencies are not allowed to sell bonds as Build America Bonds.

The specifics of the program are vague, said Guy LeBas, chief fixed income analyst with Janney Montgomery Scott LLC.

"Even so, this is an important development, as state HFA bond issuance, which averages almost $25 billion a year, is only at $7 billion as of the end of September," LeBas said.

"We expect to see a large wave of single- and multi-family HFA bond issuance through the end of 2009 as a result of the announcement of these programs. Housing bonds are not eligible for the BAB program. Therefore, this should affect only tax-exempt supply."

Massachusetts Bay bonds price

Moving back to those Massachusetts Bay Transportation bonds, the authority priced $258.14 million in series 2009 senior sales tax bonds through Goldman, Sachs & Co. and Barclays Capital Inc.

The deal included $218.3 million in series 2009C Build America Bonds and $39.84 million in series 2009D bonds.

The bonds (Aa2/AAA/) will fund capital costs and a debt service reserve fund.

The 2009C bonds are due 2020 to 2024 with a term bond due 2039. The serial 2009C bonds have 4.753% to 5.033% coupons, all priced at par. The 2039 bonds have a 5.569% coupon, also priced at par.

The 2009D bonds are due 2014 to 2019 with coupons from 3% to 5%.

New Mexico brings $130 million

Also Tuesday, the New Mexico Finance Authority priced $130 million in series 2009A state transportation refunding revenue bonds, said a term sheet.

The bonds (Aa2/AA+/) were sold through senior manager Morgan Stanley & Co. Inc. with Merrill Lynch & Co. and Piper Jaffray & Co. as the co-managers.

The bonds are due 2011 to 2016 with coupons from 2% to 5%.

Proceeds will be used to refund the authority's series 2004B, 2006B and 2008A through 2008D bonds.

Charlotte sells $122.32 million

In other pricing news, the City of Charlotte, N.C., sold Tuesday $122.315 million in series 2009B general obligation refunding bonds, said a pricing sheet.

The bonds (Aaa/AAA/AAA) were sold through senior manager Wachovia Bank, NA.

The bonds are due 2010 to 2029.

Proceeds will be used to refund existing debt.

Connecticut to price $550 million

Looking to upcoming supply, the State of Connecticut is expected to price $550 million in series 2009 transportation infrastructure purposes special tax obligation bonds, said a preliminary official statement.

The sale includes $250 million in series 2009A bonds, $250 million in series 2009B Build America Bonds and $50 million in series 2009C refunding bonds.

Siebert Brandford Shank & Co. LLC is the senior manager.

The 2009A bonds are due 2010 to 2019, and the 2009B bonds are due 2020 to 2029. The 2009C bonds are due 2010 to 2014.

Proceeds will be used to fund transportation infrastructure projects as well as to refund existing debt.

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