Yields end flat as market preps for another deluge; Railsplitter Tobacco plans $1.46 billion

By Sheri Kasprzak

New York, Nov. 29 - Municipals were largely unmoved to kick off the week following the Thanksgiving holiday, and there seemed to be plenty of issuers left over from the recent round of primary action.

"There's not a lot of movement," reported one trader reached during the afternoon.

"There's a sense that everyone's just getting back down to business again. Trading is pretty light."

Meanwhile, high-grade intermediate and long bonds were down by 9 basis points last week, reported Tom Kozlik, municipal credit analyst with Janney Montgomery Scott LLC.

"Municipal bond mutual fund flows have been generally positive over the past two years, but Lipper FMI reported a second consecutive week of large outflows," Kozlik noted.

"For the week ending Nov. 24, investors sold $2.2 billion of muni funds, following volatility in the tax-exempt markets. The second week of outflows follows from the largest outflow recorded when funds experienced $3.1 billion of withdraws for the week ended Nov. 17."

Railsplitter deal to come

Heading up the fairly heavy primary calendar for the week ahead is a $1.46 billion offering of series 2010 tobacco settlement revenue bonds from the Railsplitter Tobacco Settlement Authority of Illinois.

"The Illinois Railsplitter Tobacco Settlement Authority received A level ratings from S&P, a relatively high rating for an issue in a sector that has been battered with downgrades and warnings over the recent term," Kozlik said Monday.

"S&P rated the serial bonds an A, and the term bonds were graded A- by S&P. Fitch rated the Illinois tobacco bonds BBB+."

A retail order period was conducted Monday, and another will be conducted Tuesday before the offering is opened up to institutional investors on Wednesday.

Barclays Capital Inc. and Citigroup Global Markets Inc. are the senior managers.

The bonds are due 2012 to 2021 with term bonds due 2024 and 2027.

Proceeds will be used to fund Illinois general expenses once the state transfers all of its tobacco revenue rights to the authority, per a 1998 master settlement agreement between Illinois and the major tobacco companies.

N.Y. urban development ahead

Also ahead during the week, the New York State Urban Development Corp. is set to sell $1.105 billion of series 2010 state personal income tax revenue bonds (//AA). The bonds are set to price Thursday with Citigroup as the senior manager for the series 2010B and 2010C bonds and Morgan Stanley & Co. Inc. as the lead for the 2010A bonds.

Proceeds will be used to finance capital improvements and equipment purchases for state agencies and the City University of New York.

PANYNJ to fly JFK bonds

Coming up on Tuesday, the Port Authority of New York and New Jersey will bring $840 million of series 2010 debt securities, said a sales calendar.

The bonds (Baa3//BB) will be sold on a negotiated basis with Citigroup as the senior manager.

Proceeds from the sale will be used to expand the JFK International Air Terminal for Delta Airlines at John F. Kennedy International Airport.

N.J. turnpike deal planned

Out on the horizon, the New Jersey Turnpike Authority is expected to bring to market $1.5 billion of series 2010A turnpike revenue Build America Bonds, said a preliminary official statement.

The bonds will be sold on a negotiated basis with Goldman, Sachs & Co. and Citigroup as the senior managers.

Proceeds will be used to pay for construction projects that are part of the authority's 10-year capital improvement plan.

The authority, based in East Brunswick Township, N.J., operates the New Jersey Turnpike.

Orange sanitation bonds price

During Monday's light primary action, the Orange County Sanitation District of California sold $157 million of series 2010C wastewater revenue obligations, said a pricing sheet.

The bonds (/AAA/AAA) were sold competitively with Barclays winning the bid.

The bonds are due Feb. 1, 2032 and Feb. 1, 2044. The 2032 bonds have a 6.35% coupon, and the 2044 bonds have a 6.4% coupon priced at 101.654. The 2032 bonds were not reoffered.

Proceeds from the sale will be used to finance improvements to the county's wastewater system.

The sanitation district is based in Fountain Valley, Calif.

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