Munis close unchanged as market preps for increased supply; New York plans $641.56 million

By Sheri Kasprzak

New York, March 7 - Amid light trading action and little supply, municipal yields were mostly flat on Monday as the supply-starved market waited for an expected pick-up in new issues to begin.

"Not a lot to report," said one trader Monday afternoon.

"Trading is very light. We'll see how the supply affects us. There's a lot of speculation that once things pick up again, we're [yields] going to get smacked. It's probably true, but I'm trying to be an optimist."

Meanwhile, muni-to-Treasury ratios moved higher, Alan Schankel, managing director with Janney Montgomery Scott LLC, reported Monday.

"The benchmark MMA 30-year yield finished [Friday] at 5.04%, after spending five days in sub-five percent territory," he wrote.

"Technical underpinnings of munis are largely unchanged in recent weeks, with fund flows still outward bound, although at a slower pace, though new issues will be a little busier this week than last."

New York City will lead the pack of new issues with a $641.455 million offering of series 2011I general obligation bonds to be sold on both a competitive and negotiated basis.

The retail order period for the $400 million of series 2011I-1 tax-exempt G.O. bonds began on Friday. The city will complete the pricing for those bonds, which are being sold through Bank of America Merrill Lynch, on Tuesday. Also on Tuesday, the city will sell $56.4 million of series 2011I-2 taxable bonds and $185.055 million of series 2011I-3 taxable bonds on a competitive basis.

Proceeds will be used to redeem the city's series 2008J-13 and 2008J-14 variable-rate bonds.

"This issue is structured with maturities running out to nine years with a 3.35% preliminary yield in 2020," said Schankel.

S&P ups Puerto Rico

Elsewhere, Standard & Poor's upgraded the Commonwealth of Puerto Rico's G.O. debt to BBB from BBB-, said Schankel.

The move came just days before the commonwealth will come to market with $250 million of series 2011C public improvement refunding bonds through Morgan Stanley & Co. Inc. and Barclays Capital Inc.

The commonwealth is slated to bring those bonds on Wednesday, and the proceeds will be used to refund existing debt.

Connecticut preps deal

Looking out on the horizon, the State of Connecticut is expected to price $200 million of series 2011A state revolving fund general revenue bonds during the week of March 14, said a preliminary official statement.

The bonds will be sold on a negotiated basis with Ramirez & Co. as the senior manager.

The bonds are due 2012 to 2031.

Proceeds will be used to fund loans and to reimburse the state for previously advanced loans.

Florida housing deal ahead

Also coming up, the Florida Housing Finance Corp. is set to bring $88.845 million of series 2011 homeowner mortgage revenue bonds, said a preliminary official statement.

The offering includes $51.69 million of series 2011-1 AMT bonds, $27.155 million of series 2011-2 non-AMT bonds and $10 million of series 2011-3 non-AMT bonds.

The bonds will be sold with Citigroup Global Markets Inc. as the lead manager.

The 2011-1 bonds are due 2011 to 2019 with a term bond due July 1, 2041. The 2011-2 bonds are due 2019 to 2022 with a term bond due July 1, 2025 and the 2011-3 bonds are due Jan. 1, 2027.

Proceeds will be used to fund mortgage loans and to refund existing debt.

Based in Tallahassee, the authority provides mortgage loans to low- to moderate-income Floridians.

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