Municipal yields continue to slide; Illinois brings $356 million taxable G.O. bonds to market

By Sheri Kasprzak

New York, April 6 - Municipal yields once again suffered from gains, especially on the short end of the curve, market insiders reported.

"Short end is still seeing the biggest gains, maybe 2 or 3 basis points," said one trader.

Meanwhile, primary activity dominated on Tuesday. The action was led by a $356 million sale of series 2010 taxable general obligation bonds from the State of Illinois.

The sale included $300 million in series 2010-2 Build America Bonds and $56 million in series of March 2010 taxable bonds, said a term sheet.

The bonds (A2//A-) were sold competitively with J.P. Morgan Securities Inc. winning the bid.

The Build America Bonds are due 2011 to 2030 with a term bond due 2035. The serial coupons range from 1.45% to 6.75%, all priced at par. The 2035 bonds have a 6.9% coupon, priced at par.

The taxable bonds are due 2011 to 2030 with a term bond due 2035. The serial coupons range from 1.45% to 6.75%, all priced at par. The 2035 bonds have a 6.9% coupon, also priced at par.

"It went pretty well, from what we've seen," said one sellsider who saw the deal.

"We haven't seen the full details yet, but from what we've seen, it looks like short went a little cheap. The longer end seems OK. I'm sure they'll [Illinois] take it as a win."

The proceeds will be used to finance school district capital projects throughout the state.

Maine Health prices $95 million

In other pricing news, the Maine Health and Higher Educational Facilities Authority priced Tuesday $95 million in series 2010A revenue bonds, said a pricing sheet.

The bonds (Aa3//AA) were sold on a negotiated basis with Bank of America Merrill Lynch and Morgan Stanley & Co. Inc. as the senior managers.

The bonds are due 2011 to 2025 with term bonds due 2027, 2030, 2031, 2035 and 2040. The coupons ranged from 2.5% to 5.25%. Yields were not immediately available.

Proceeds from the sale will be used to make a deposit to a construction fund and to refund existing debt.

Orlando Redevelopment sells bonds

Elsewhere, the Orlando Community Redevelopment Agency in Florida sold $75.48 million in series 2010 tax increment revenue bonds (A2/A/A), said a pricing sheet.

The sale included $7.51 million in series 2010A downtown district tax-exempt bonds and $67.97 million in series 2010B downtown district Build America Bonds.

The 2010A bonds are due 2014 to 2018 with 3% to 4% coupons. The 2010B bonds are due 2019 to 2025 with term bonds due 2030 and 2040. Serial coupons range from 6.21% to 7.784%, all priced at par. The 2030 bonds have a 7.584% coupon, priced at par, and the 2040 bonds have a 7.784% coupon, also priced at par.

Bank of America Merrill Lynch and Morgan Stanley were the senior managers.

Proceeds will be used to construct a performing arts center in downtown Orlando.

Washington utility district deal ahead

Looking out on the horizon, the Public Utility District No. 2 of Grant County, Wash., is expected to bring to market $344.555 million in series 2010 Priest Rapids Hydroelectric Project revenue and refunding bonds, said a preliminary official statement.

The sale includes $39.475 million in series 2010A non-AMT bonds, $10.935 million in series 2010B AMT bonds, $166.445 million in series 2010L Build America Bonds, $90 million in series 2010M new clean renewable energy bonds and $37.7 million in series 2010Z taxable bonds.

The bonds (Aa3/AA-/AA) will be sold on a negotiated basis with Citigroup Global Markets Inc. as the senior manager.

The 2010A bonds are due 2011 to 2023, and the 2010B bonds are due 2011 to 2018. The 2010L bonds are due 2020, 2025, 2030 and 2040. The 2010M bonds are due 2027, and the 2010Z bonds are due 2020, 2025, 2030 and 2040.

Proceeds from the offering will be used to finance improvements to the Priest Rapids project as well as refund existing debt.

The district, based in Ephrata, Wash., operates electric-producing properties, including the Electric System and the Priest Rapids Hydroelectric Project.

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