Yields hold steady as market prepares for another deluge; Love Field preps $310 million sale

By Sheri Kasprzak

New York, Nov. 1 - Municipal yields kicked off November largely unmoved as the market prepares for yet another influx of new issues, said market insiders.

The week ahead seems to be the calm before the storm, as the rest of the month might bring a flood of deals - and some of those sales will come from less-than-stellar credits.

"We're in a wait-and-see period," said one trader.

"It's been pretty quiet today, but I have a feeling it might get ugly as the month goes on. We're just waiting for another wave of new issues."

As the election looms on Tuesday, some issuers might be waiting to hear about the fate of Build America Bonds, he noted, and this might keep yields flat for another day or so until the election results are known.

"I suspect that if they're [BABs] extended for a year, we are going to see every issuer you can think of hitting the market to get in before it's too late," he said.

Alan Schankel, managing director with Janney Montgomery Scott LLC, said Monday that muni market issuance as of Oct. 31 topped sales from the equivalent period in 2009 by $5 billion. For the year through Oct. 31, muni issuance has cleared $340 billion.

"Volume is on track to clear $400 billion for the second year in a row if November and December both exceed $30 billion, a likely outcome," Schankel said.

"Build America Bonds have made up about 25% of total volume so far this year, and uncertainty about BABs program extension isn't stopping issuers from [exploring] the taxable option."

Schankel pointed out that the Los Angeles County Metropolitan Transportation Authority is bringing $740 million of Build America Bonds through Barclays Capital Inc., Citigroup Global Markets and Goldman Sachs & Co. during the week, and Chicago also plans to hit the market with $423 million in water revenue Build America Bonds through Cabrera Capital Markets LLC and BMO Capital Markets LLC.

Love Field to fly deal

Looking to Tuesday's primary calendar, the Love Field Airport Modernization Corp. of Texas is slated to sell $310 million of series 2010 special facilities revenue bonds through Goldman Sachs.

The bonds (Baa3/BBB/) are due Nov. 1, 2040, and proceeds will be used to construct and implement improvements to terminal, concourse and ancillary facilities at Love Field Airport in Dallas.

Also coming up on Tuesday, the Massachusetts Housing Finance Agency is set to sell $212.18 million of series 2010 housing bonds in three tranches through Barclays, Cabrera and Bank of America Merrill Lynch.

The sale includes $130.99 million of series 2010C AMT bonds, $67.825 million of series 2010D taxable bonds and $13.365 million of series 2010E non-AMT bonds.

Proceeds will be used to refund the agency's series 2000A-B and 2001A-E rental housing mortgage revenue bonds.

California Statewide sale ahead

Looking out on the horizon, the California Statewide Communities Development Authority plans to bring $781.285 million of series 2010 gas supply variable-rate revenue bonds.

The bonds (Aaa/VMIG 1) will be sold through RBC Capital Markets Corp. and are due Nov. 1, 2040.

Proceeds will be used to finance the prepayment of a 30-year gas supply agreement with the Sacramento Municipal Utility District.

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