Municipals miss equity rally; Maryland prices $490.8 million, look for more; D.C. plans $445.09 million

By Cristal Cody and Aaron Hochman-Zimmerman

New York, March 4 - Municipal markets missed the boat and had to sit out the rally on Wall Street on Wednesday.

While the S&P 500 jumped back over the 700 mark to finish at 712.87, "the [municipal] market was on the weak side," a trader said. "The yield curve is really steep."

March is traditionally a slow month, he said, as tax season causes investors to hold back from major portfolio changes before returns are filed.

The trading desks saw lower demand, he said, but investors jumped at the $490.8 million from the Maryland Board of Public Works, which he called "a safe haven."

Investors have also been able to overcome their bouts of risk aversion for higher yielding products in the 15-year range, he said.

"That's where the strength has been," he added.

Maryland finishes $490.8 million, plans more

The Maryland Board of Public Works priced $490.8 million general obligation bonds (Aaa/AAA/AAA), according to Howard Freedlander, deputy treasurer for external affairs.

"We were very pleased," Freedlander said, especially for the first-of-its-kind retail sale.

"We're still getting phone calls," he said, and "we're hoping to do this again this summer ... based on the great success of this sale."

The issue became the largest issue of debt to retail investors in modern Maryland's history as $291.58 million was sold to the retail sector at a 3.47% average yield.

Merrill Lynch acted as underwriter for the negotiated sale.

Merrill Lynch also rounded out the issue by buying $199.22 million in competitively sold bonds at a yield of 3.39%.

Public Financial Management acted as financial adviser for the competitive deal.

State officials were also pleased with the results on the institutional side.

"Despite the difficult economic climate, our institutional sale also surpassed expectations. We attracted a very favorable interest rate, a benefit to our taxpayers," state treasurer Nancy Kopp said in a statement.

Proceeds will be used to acquire and construct state facilities, make capital grants to local governments and refund outstanding debt.

Debt issue without representation

Another large offering is in the works, this time from the District of Columbia, which plans to price $445.09 million income tax secured revenue and revenue refunding bonds.

The $310 million series 2009A revenue bonds have serial maturities from 2010 through 2029.

The $135.09 million series 2009B revenue refunding bonds have serial maturities from 2020 through 2027.

The bonds (Aa2/AAA/AA) will be sold through a negotiated sale led by senior manager Merrill Lynch & Co.

The proceeds will be used to provide funds for capital projects and to refund the outstanding series 2003C, 2003D1, 2003D2 and 20003D3 G.O. bonds.

COPs popular in North Carolina, Florida

Two sales of certificates of participation are coming up as well.

Cumberland County in North Carolina plans to price $110.65 million in COPs, according to a preliminary official statement.

The sale includes $22.445 million series 2009A COPs and $88.205 million series 2009B refunding COPs.

The series 2009A COPs have serial maturities from 2010 through 2028, and the series 2009B COPs have serial maturities from Dec. 1, 2009 through Dec. 1, 2024.

The COPs (Aa3/AA/) will be sold through a negotiated sale led by senior manager Banc of America Securities LLC.

The proceeds will be used to refund debt and finance the acquisition and construction of an elementary school and branch library.

The School Board of Sarasota County in Florida expects to price $74.195 million in COPs the week of March 9, a market source told Prospect News on Wednesday.

"It will either be the 10th, 11th or 12th, but most likely the 10th," the source said.

The series 2009 COPs (Aa3/AA-/AA-) have serial maturities from 2010 through 2024, according to a preliminary official statement released Wednesday.

RBC Capital Markets Corp. is the senior manager of the negotiated sale.

The proceeds will be used to finance the acquisition, construction and installation of educational facilities.

Seattle goes competitive for G.O.s

Also ahead, the City of Seattle, Wash., plans to sell $99.975 million in G.O. improvement and refunding bonds through a competitive sale on March 11, according to a notice of sale.

The series 2009 bonds have serial maturities from 2010 through 2034.

Seattle-Northwest Securities Corp. is the financial adviser for the sale.

The proceeds will be used to fund projects and to refund the outstanding series 1996 Pike Place special obligation bonds.

New York building aid revenue bonds

In other deals, the New York Transitional Finance Agency was expected to sell $400 million in series 2009S4 building aid revenue bonds (//A+) on Wednesday.

Calls for additional information were not immediately returned.

The bonds have serial maturities from 2011 through 2029.

Goldman, Sachs & Co. and Citigroup Global Markets Inc. were the senior managers of the negotiated sale.

The proceeds will be used to pay a portion of the costs for the agency's five-year school-building plans.

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