Munis close weaker; Alaska Housing Finance brings $105 million; South Carolina plans G.O. sale

By Sheri Kasprzak

New York, Feb. 3 - Weakness crept into the muni market Thursday, with long bonds taking the brunt of the hit, said market insiders. Long bonds were seen weaker by 3 to 4 basis points, while shorter maturities were off by 1 to 2 bps.

"There's a bit of pressure on the long end of the market," noted one trader. "The short end is off as well, but not by as much."

Meanwhile, limited new issue supply, something that many market insiders have credited with removing some of the pressure from muni yields over the past several weeks, will remain low, said Alan Schankel, managing director with Janney Montgomery Scott LLC. The 30-day visible supply is still below $10 billion, Schankel said, buoyed by Illinois' $3.7 billion sale expected to hit the market in two weeks.

"Mutual fund data from ICI for the week ended Jan. 26 indicate outflows from tax-free funds continue, with $2.7 billion in additional redemptions, making January the largest outflow month on record," Schankel noted.

"Other fund categories, including equities and taxable fixed income, had strong inflows in January."

Alaska housing bonds price

Moving to Thursday's primary action, the Alaska Housing Finance Corp. led activity with its $105 million sale of series 2011A state capital project bonds. The offering was upsized from $97.315 million.

The bonds (Aa2) were sold through Goldman Sachs & Co.

The bonds are due 2011 to 2027 with coupons from 2% to 5%, said a pricing sheet.

The corporation intends to use the proceeds to finance the construction and equipment of office space as well as to refund existing debt.

D.C. drives sale

Elsewhere, the District of Columbia sold $82.61 million of series 2011 federal highway grant anticipation bonds Thursday, according to a term sheet.

The bonds (Aa2/AA/) were sold through Barclays Capital Inc. and Ramirez & Co. Inc. The co-managers were Cabrera Capital Markets LLC, J.P. Morgan Securities LLC, M.R. Beal & Co. Inc. and TD Securities (USA) LLC.

The bonds are due 2011 to 2025 with coupons from 2% to 5.25%.

Proceeds will be used to fund highway improvements ahead of the receipt of federal highway grants.

U of San Francisco prices deal

Out West, the California Educational Facilities Authority priced $79.77 million of series 2011 revenue bonds for the University of San Francisco, said a term sheet.

The bonds (A3) were sold through Bank of America Merrill Lynch.

The bonds are due 2011 to 2021 with term bonds due in 2030 and 2036. The serial coupons range from 3% to 5.5%. The 2030 bonds have a 6.125% coupon priced at 99.708. The 2036 bonds have a 6.125% coupon priced at 98.404.

Proceeds will be used to redeem a portion of the university's series 2005A and 2006 variable-rate revenue refunding bonds.

South Carolina preps deal

Looking to the coming week's offerings, the State of South Carolina is scheduled to bring $468.93 million of general obligation bonds Wednesday, said preliminary official statements.

The offering includes $197.235 million of series 2011A G.O. state school facilities refunding bonds, $126.295 million of series 2011A G.O. state capital improvement refunding bonds, $19.225 million of series 2011A state institution refunding bonds for the University of South Carolina, $66.225 million of series 2011B G.O. state institution bonds for Clemson University, $15 million of series 2011C G.O. state institution bonds for Midlands Technical College, $18.95 million of series 2011D G.O. state institution bonds for the University of South Carolina and $26 million of series 2011E G.O. state institution bonds for the University of South Carolina.

The bonds will be sold competitively with Public Resources Advisory Group as the financial adviser.

The 2011A school facilities refunding bonds are due 2012 to 2017, and the 2011A state capital improvement refunding bonds are due 2012 to 2018. The 2011A refunding bonds for the University of South Carolina are due 2012 to 2022. The remainder of the bonds are due 2012 to 2031.

Proceeds will be used to finance improvements and upgrades to the colleges and universities as well as refund existing debt.

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