Lighter primary calendar gives muni yields a breather; Puerto Rico Electric sells $350 million

By Sheri Kasprzak

New York, Dec. 20 - Municipal yields were unchanged to firmer Monday as a lighter primary calendar ahead of the holidays allowed the market to catch its breath, market insiders reported.

"It is very, very quiet," said one trader reached late in the day.

"There's a bit of trading going on here and there. I think this week will be quiet all around. I think since primary is quiet, yields are going to get a little better just because we won't have that constant supply pressure to worry about. It would be surprising to see sudden activity [in primary], so I suspect it will be quiet for the rest of the year."

Meanwhile, all might not be lost for the popular Build America Bonds program. Republican representative John Mica of Florida announced late last week that he intends to reintroduce a form of the program to Congress in the coming year once he takes over as chairman of the House Transportation and Infrastructure Committee.

Tom Kozlik, municipal credit analyst at Janney Montgomery Scott LLC, noted on Monday that the news would be welcome on both the buy and sell sides of the market, "depending upon the structure and the amount of the issuer subsidy."

One sellside source said the program would be welcome back in the market, but Mica has not released enough information on his proposal.

"Sure it could be great if it gets reintroduced," said the sellsider.

"From what I've seen, though, he [Mica] hasn't really given any indication of what his version of the program would be, what sort of subsidy he's proposing or any sort of nuts-and-bolts details. It would be easier to comment on it if we had more information, but I suppose that's coming down the line. We'll see what he's got in mind."

Puerto Rico bonds price

Heading up a light primary calendar for Monday was a Build America Bonds deal from the Puerto Rico Electric Power Authority, which sold $350 million of series 2010EEE power revenue bonds, said a pricing sheet.

The bonds are due July 1, 2030, July 1, 2032 and July 1, 2040. The coupon is 5.95% for the 2030 bonds, 6.05% for the 2032 bonds and 6.25% for the 2040 bonds. The bonds all priced at par.

UBS Financial Services Inc. of Puerto Rico and Santander Securities were the senior managers.

Proceeds will be used to fund the authority's capital program and to construct the Via Verde natural gas pipeline.

Two New York deals ahead

Coming up in the remainder of the Christmas-shortened week in municipals are two large offerings out of New York.

The larger of the two comes from the New York Liberty Development Corp., which plans to sell $1.308 billion of series 2010 liberty revenue bonds through Goldman, Sachs & Co. and J.P. Morgan Securities LLC.

The bonds are due Dec. 15, 2050, and proceeds will finance the reconstruction of Tower 4 of the World Trade Center.

Also out of New York this week, the city's Metropolitan Transportation Authority is gearing up to sell $350 million of series 2010E transportation revenue bonds through Barclays Capital Inc. and Wells Fargo Securities LLC. Those bonds are slated to price on Wednesday.

The bonds (//A+) are due Nov. 15, 2030 and Nov. 15, 2040.

Proceeds will be used to finance commuter and transit projects.

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