Municipals seen weaker; Los Angeles Unified School District sells $1.75 billion in G.O. bonds

By Sheri Kasprzak

New York, Feb. 18 - Municipal yields were seen somewhat weaker on Thursday as two billion-dollar sales dominated investor interest, market insiders said.

"We're a touch off across the curve," said one trader reached in the afternoon.

"Everyone's focused on L.A. [USD] and Illinois, so trading is pretty light too."

The deal of the day came from the Los Angeles Unified School District, which priced $1.746 billion in series 2010 general obligation bonds (Aa3/AA-/), said pricing sheets.

The bonds were sold with Citigroup Global Markets Inc. as the joint bookrunner for the series 2010RY bonds, lead for the 2010KRY bonds and sole manager for the series 2010-I and 2010-A bonds. Barclays Capital Inc. was the joint bookrunner for the series 2010RY bonds. Goldman, Sachs & Co. was the joint bookrunner for the series 2010RY bonds. Morgan Stanley & Co. Inc. was the joint bookrunner for the 2010RY and 2010KRY bonds.

The sale included $1,250,585,000 in series 2010RY Build America Bonds, $416.62 million in series 2010KRY bonds, $74.995 million in series 2010-A refunding bonds and $3.795 million in series 2010-I refunding bonds.

The 2010RY bonds are due 2034 with a 6.758% coupon, priced at par. The 2010-A bonds are due 2010 to 2015 with 2% to 5% coupons, and the 2010-I bonds are due 2013 with a 2.75% coupon, priced at 100.536. The full details of the 2010KRY bonds were not immediately available, but the bonds are due 2018 to 2026 with term bonds due 2010, 2028 and 2034. Coupons range from 1.5% to 5.25%.

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

Illinois sells $1.44 billion

Also on Thursday, the State of Illinois priced $1.435 billion in series 2010 G.O. refunding bonds, said pricing sheets.

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

The sale included bonds insured by Assurance Guaranty Municipal and some uninsured bonds.

The uninsured bonds are due 2011 to 2025 with 2% to 5% coupons. The AGM-insured bonds are due 2015 to 2023 with 3% to 5% coupons.

Proceeds will be used to refund existing G.O. bonds.

MEAG sale ahead

Looking to upcoming offerings, the Municipal Electric Authority of Georgia is expected to bring to market $2.533 billion in series 2010 Plant Vogtle project bonds Tuesday, said preliminary official statements. The sale will come to market in several tranches.

The sale includes $953.24 million in series 2010A project M Build America Bonds, $19.68 million in series 2010B project M tax-exempt bonds, $1,114,655,000 in series 2010A project J Build America Bonds, $26.57 million in series 2010B project J tax-exempt bonds, $410.88 million in series 2010A project P Build America Bonds and $8.245 million in series 2010B project P tax-exempt bonds.

Goldman Sachs is the bookrunner for all of the bonds.

The project M Build America Bonds are due 2019 to 2057, and the project M tax-exempt bonds are due 2017 to 2029 with a term bond due 2040. The project J Build America Bonds are due 2018 to 2057, and the project J tax-exempt bonds are due 2017 to 2021 with a term bond due 2040. The project P Build America Bonds are due 2018 to 2057, and the project P tax-exempt bonds are due 2017 to 2020 with a term bond due 2040.

Proceeds will be used to construct new Plant Vogtle electric generation facilities.

Energy Northwest to price

Also out on the horizon, Energy Northwest of Washington is expected to sell $470.69 million in series 2010 revenue refunding bonds, said a preliminary official statement.

The sale includes $68.35 million in series 2010A project 1 bonds, $279.67 million in series 2010A project 3 bonds, $1 million series 2010B project 1 bonds, $15.615 million in series 2010B Columbia Generating Station bonds, $29.93 million in series 2010B project 3 bonds and $76.125 million in series 2010C Columbia Generating Station.

Goldman Sachs, Citigroup and J.P. Morgan Securities Inc. are the senior managers.

Proceeds will be used to refund existing debt issued to construct several power generation stations.

Energy Northwest is based in Richland, Wash.

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