Primary, secondary munis see strong activity as Montgomery County, Md., deal surprises market

By Cristal Cody

Tupelo, Miss., Aug. 3 - The municipal primary and secondary bond markets saw "another up day" on Wednesday, according to a trader.

"The big deal of the day was the Montgomery, Md., deal, which came at much higher-than-expected levels," the trader said.

"It came 10 basis points through the AAA scale and pulled the whole market with it. All the generic scales were bumped."

Montgomery County in Maryland sold $579.41 million of series 2011 consolidated public improvement general obligation bonds (Aaa/AAA/AAA) through competitive sales on Wednesday.

The deal included $320 million of series 2011A bonds with J.P. Morgan Securities Inc. as the winning bidder and $259.41 million of series 2011B with Citigroup Inc. as the winning bidder. Additional pricing details were not immediately available.

The series 2011A bonds are due 2012 to 2031, and the 2011B bonds are due 2012 to 2033. Proceeds will be used to refinance all or a portion of the county's outstanding bond anticipation notes and refund existing general obligation debt.

"There was some talk about Montgomery County being downgraded because of its reliance or proximity to the nation's capital, so if the United States got downgraded, Montgomery County would get downgraded as well," the bond source said.

The sale on Wednesday "just came so much higher than people's expectations - lower in yield, higher in price - that it tells you the municipal market doesn't think it's going to be downgraded."

New York City Transitional Finance Authority also sold $300 million of series 2012A future tax secured subordinated bonds via a negotiated sale through lead manager J.P. Morgan Securities LLC. Final pricing terms were unavailable.

Coming up, the big deal on Thursday is expected from Virginia College Building Authority, which plans an offering of $274.895 million of series 2011A educational facilities revenue bonds. The bonds will price through a competitive sale. First Southwest Co. is the financial adviser.

The bonds have serial maturities from 2013 to 2032. Proceeds will be used to finance capital projects and acquire equipment for various higher educational facilities in Virginia.

A few new issuers announced upcoming offerings. Private Colleges and Universities Authority plans to sell $218.775 million of revenue bonds for Emory University in Atlanta, while Puerto Rico Public Buildings Authority will sell $225 million of government facilities revenue bonds.

Emory University bonds

Private Colleges and Universities Authority intends to bring $218.775 million of revenue bonds for Emory University in Atlanta, according to a preliminary official statement.

The series 2011A bonds (Aa2/AA/) are due in 2016 and 2041.

Barclays Capital Inc. and Morgan Stanley & Co. are lead managers of the negotiated deal.

Proceeds will be used to refund all of the outstanding Emory University series 2001A revenue bonds, a portion of the series 2002A revenue bonds and all of the outstanding series 2008B revenue bonds.

Puerto Rico Public Buildings

Puerto Rico Public Buildings Authority will sell $225 million of government facilities revenue bonds, according to a preliminary official statement.

The series S bonds are guaranteed by the Commonwealth of Puerto Rico.

Ramirez & Co., Inc. and RBC Capital Markets Corp. are lead managers of the negotiated sale Proceeds will be used to repay the Government Development Bank's lines of credit.

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