Municipals end mostly unchanged; New Mexico prices $232.3 million issue of severance tax bonds

By Sheri Kasprzak

New York, Feb. 16 - Municipals got back down to business after a long weekend with little movement, market insiders said.

"It has been pretty quiet," said one sellsider reached during the day.

"Not a lot is pricing. We're still kind of in holiday mode. Some people are still out."

A trader said the secondary side of the market was equally slow.

"We're mostly unchanged," said the trader.

"There are things trading here and there. It's not completely quiet, but there's not a lot of movement."

Amid the light trading, the Metropolitan Transportation Authority saw its series 2010B Build America Bonds moving. The 6.648% 2039 bonds were seen at 6.518%. The bonds priced earlier in the month at par.

New Mexico prices

Even though primary activity was limited Tuesday, some pricings did take place. The State of New Mexico priced $232.3 million of severance tax bonds in two tranches, according to a sellside source familiar with the offerings.

The deal included $132.3 million in series 2010A severance tax bonds (Aa2/AA-/) and $100 million in supplemental severance tax bonds (Aa3/AA-/).

Both tranches were sold competitively.

Bank of America Merrill Lynch took the 2010A bonds with a 2.38% true interest cost. The 2010A bonds are due 2011 to 2020 with 3% to 5% coupons and yields from 2.45% to 3.07%.

Wells Fargo Securities Inc. took the 2010B bonds, which are due 2011 to 2020. The coupons range from 4% to 5%, and yields range from 0.45% to 3.12%.

Proceeds will be used to fund various capital projects.

Los Angeles USD to sell

Looking at upcoming pricing action, the Los Angeles Unified School District plans to sell $1.746 billion in series 2010 general obligation bonds on Thursday, said a sales calendar.

The bonds (Aa3/AA-/) will be sold through Citigroup Global Markets Inc., which is the joint bookrunner for the series RY bonds, the lead manager for the KRY bonds and the sole manager for the series I and A bonds. Goldman, Sachs & Co. and Morgan Stanley are the joint bookrunners for the series RY bonds, and Morgan Stanley is the joint bookrunner for the KRY bonds. RBC Capital Markets Corp., Stone & Youngberg and Rice Financial Products Co. are the co-managers for the KRY bonds.

Proceeds will be used to construct new schools, repair and renovate existing schools, improve technology systems, purchase library books and refund debt.

Illinois to price $1.44 billion

Another billion-dollar sale coming up for the week also comes to market on Thursday. The State of Illinois plans to price $1.435 billion in series 2010 G.O. refunding bonds on that day, said a sales calendar.

The bonds (A2/A+/A) will be sold through senior managers Morgan Stanley and Citigroup.

The bonds are due 2011 to 2025.

Proceeds will be used to refund all or a portion of maturities of outstanding G.O. bonds as well as to purchase U.S. Treasury obligations to provide for the refunding.

Miami-Dade preps $600 million deal

Out on the horizon, Miami-Dade County in Florida is gearing up to sell $600 million in series 2010 water and sewer system revenue bonds, said a preliminary official statement.

The bonds (A1/A+/A) will be sold through senior manager Raymond James & Associates Inc.

Proceeds will be used to fund improvements to the county's water and sewer system.

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