Municipal yields close unchanged to slightly lower; Pennsylvania prices $1 billion G.O. bonds

By Sheri Kasprzak

New York, May 19 - Municipal yields were unchanged to slightly better in spots Wednesday as investors continued to chew on a healthy supply of new offerings, market insiders reported.

"We're seeing spotty gains here and there," said one trader.

"Yields are probably down 1 or 2 basis points in places, but everything else is flat."

Meanwhile, primary action continued to dominate muni activity, led by a $1 billion sale of series 2010 general obligation bonds from the Commonwealth of Pennsylvania.

The commonwealth sold the bonds in two tranches, said a term sheet and a source close to the offering.

The deal included $451.1 million in series 2010A tax-exempt bonds and $548.9 million in series 2010B Build America Bonds.

Bank of America Merrill Lynch won the series 2010A bonds with a 3.34% true interest cost, and J.P. Morgan Securities Inc. won the 2010B bonds with a 2.52% TIC, the sellside source noted.

The full details of the 2010A bonds were not immediately available Wednesday, but the bonds are due 2011 to 2021. Coupons range from 2% to 5%.

The 2010B bonds are due 2022 to 2026 with a 2030 term bond. The coupons range from 4.5% to 4.9%. The 2030 bonds have a 5.35% coupon, priced at 99.752.

The bonds (Aa1/AA/AA+) will fund open-space initiatives, the construction, renovation and rehabilitation of capital projects and the renovation of water and sewer supply systems.

Puerto Rico powers deal

Meanwhile, the Puerto Rico Electric Power Authority priced Wednesday $317.06 million in series 2010CCC power revenue bonds, said a pricing sheet.

The bonds (A3/BBB+/BBB+) were sold through senior manager JPMorgan.

The bonds, which are due 2021 to 2028, have coupons from 4.25% to 5.25%.

Proceeds will be used to fund capital improvement projects and refund debt.

The San Juan-based authority is an electric power provider.

Louisville sewer BANs price

In other news, the Louisville & Jefferson County Metropolitan Sewer District of Kentucky sold $226.34 million in series 2010A sewer and drainage system subordinated bond anticipation notes, said a pricing sheet.

The BANs (MIG 1/SP-1+/F1+) were sold competitively with JPMorgan winning the bid. The TIC came in at 0.63%.

The bonds are due May 26, 2011 and have a 1.25% coupon, priced at par.

Proceeds will be used to retire the district's series 2009A bonds, which were used to refund its series 1999A revenue bonds.

The district provides water and sewer services for the city.

San Diego TRANs planned

Looking to upcoming sales, the County of San Diego and the San Diego County School Districts of California are set to price $264.745 million in series 2010 tax and revenue anticipation notes, said a preliminary official statement.

The deal includes $140 million in series 2010A notes, $22.84 million in series 2010B-1 notes (/SP-1+/) and $101.905 million in series 2010B-2 notes (/SP-1+/).

The series 2010A notes are due June 30, 2011. The 2010B-1 notes are due Jan. 31, 2011, and the 2010B-2 notes are due April 29, 2011.

RBC Capital Markets Corp. and De La Rosa & Co. are the senior managers.

The proceeds will be used to finance capital projects ahead of the collection of certain taxes and revenues.

Illinois' artistic deal

In other upcoming deals, the Illinois Finance Authority is expected to sell $115 million in series 2010A revenue bonds for the Art Institute of Chicago, said a preliminary official statement.

The bonds (A1/A+/) will be sold on a negotiated basis with JPMorgan and Loop Capital Markets LLC as the senior managers. The co-managers are Morgan Stanley & Co. Inc. and William Blair & Co. LLC.

Proceeds from the sale will be used to redeem the institute's series 1992, 1995 and 1996 bonds as well as repay a line of credit.

The Chicago-based authority provides financing for nonprofit organizations.

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