Long bonds weaken as market prepares for more supply; Michigan Finance brings $231 million

By Sheri Kasprzak

New York, March 3 - Municipal yields, particularly on the long end of the curve, were slightly weaker on Thursday as the market prepared for an increase in supply in the coming week.

"There has been a bit of selling today," said one trader.

"I think we're starting to finally feel a little supply pressure because some good-sized new issues are coming next week. There's not a lot of movement [in yields], but long bonds are off by 1 to 2 bps."

The market, which has been void of substantial tax-exempt bonds over the past several months, will get a shot in the arm thanks to major offerings from the City of New York and the State of Maryland. Both deals include taxable tranches, but the largest portions are tax-exempt.

NYC preps G.O. bonds

Coming on Tuesday is New York City's $641.455 million sale of series 2011I general obligation bonds. The tax-exempt portion of the bonds will be sold through senior manager Bank of America Merrill Lynch, and the taxable portion will price competitively.

The offering includes $400 million of series 2011I-1 tax-exempt bonds, $56.4 million of series 2011I-2 taxable bonds and $185.055 million of series 2011I-3 taxable bonds.

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

Maryland plans sale

On Wednesday, Maryland will hit the market with its $485 million offering of series 2011 G.O. bonds (Aaa/AAA/AAA).

The deal includes $100 million of first series A tax-exempt bonds, $378.48 million of first series B tax-exempt bonds and $6.52 million of first series C taxable qualified energy conservation bonds.

Siebert Brandford Shank & Co. LLC is the senior manager for the first series A bonds. The first series B and first series C bonds will be sold competitively with Public Financial Management Inc. as the financial adviser.

The proceeds will be used to fund various capital projects, capital grants for local governments and matching fund loans and grants for local governments, nonprofits, hospitals and other entities. The proceeds from the first series C bonds will be used to help local educational facilities undertake energy conservation projects.

Michigan Finance brings notes

Looking to Thursday's pricing action, the Michigan Finance Authority priced $231 million of series 2011 state aid revenue notes for the School District of the City of Detroit, said a pricing sheet.

The offering included $120 million of series 2011A-1 notes and $111 million of series 2011A-2 notes.

The bonds were sold through senior managers J.P. Morgan Securities LLC and Siebert Brandford Shank.

The 2011A-1 notes are due Feb. 20, 2012 and have a 6.45% coupon priced at par. The 2011A-2 notes are due March 20, 2012 and have a 6.65% coupon priced at par.

Proceeds will be used to purchase notes to be issued by the school district.

Illinois sells revenue bonds

Elsewhere, the Illinois Finance Authority sold $132.225 million of series 2011 revenue bonds for CHF-DeKalb II, LLC on behalf of Northern Illinois University, said a pricing sheet.

The bonds (Baa3) were sold through RBC Capital Markets LLC.

The bonds are due 2020 to 2021 with term bonds due in 2024, 2031 and 2043. The serial coupons range from 5.125% to 5.75%. The 2024 bonds have a 6% coupon priced at 98.855, and the 2031 bonds have a 6.625% coupon priced at 98.615. The 2043 bonds have a 6.875% coupon priced at 98.398.

Proceeds will be used by CHF-DeKalb to construct and furnish on-campus student housing for freshmen and a community center with a full-service dining facility at Northern Illinois University, which is located in DeKalb.

Clark school bonds price

Also during the session, the Clark County School District of Nevada priced $98.58 million of series 2011 G.O. refunding bonds, said a pricing sheet.

The bonds (Aa2/AA/AA-) were sold competitively.

The offering included $69.16 million of series 2011A bonds and $29.42 million of series 2011B bonds.

The 2011A bonds are due 2013 to 2016 with 5% coupons across the board. The 2013 and 2015 maturities were not reoffered. The 2011B bonds are due 2015 to 2016 and 2019. The bonds have 5% coupons.

Proceeds will be used to refund existing debt.

The district is based in Las Vegas.

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