Yields weaken slightly as new-issue volume remains light; Williamson County, Texas, prices

By Sheri Kasprzak

New York, March 21 - Municipal yields were off slightly on Monday, and most of the weakness was seen in intermediate maturities, said market insiders.

"We're off by anywhere from 2 to 5 bps," said one trader reached during the session.

"There's not a lot of activity out there. I think the market is probably correcting itself after last week. We were riding on Treasuries' coattails, so it's time to correct."

In the week ahead, the market will feature less-than-stellar new issue offerings with just $5 billion expected, a bit higher than the $3 billion sold during the previous week, said Tom Kozlik, municipal credit analyst with Janney Montgomery Scott LLC.

Schedule 'slimmer'

"This schedule is far slimmer than last year, when issuers sold about $13 billion of municipal bonds for the week ending March 26, 2010," said Kozlik.

Some speculation has circulated that the City of Chicago will come back to the market with its postponed $998.855 million sale for Chicago O'Hare International Airport. Janney managing director Alan Schankel said late last week that the airport has resolved its legal wrangling with American and United airlines. The airlines filed a lawsuit to block the airport from making expansions that could cost the airlines a significant amount.

The Chicago offering includes $417.04 million of series 2011A passenger facility charge non-AMT revenue bonds, $43.58 million of series 2011B passenger facility charge non-AMT revenue refunding bonds, $127.065 million of series 2011C passenger facility charge AMT revenue refunding bonds and $411.17 million of series 2011A grant receipts and subordinate-lien passenger facility charge revenue bonds.

The bonds will be sold through Citigroup Global Markets Inc. and Siebert Brandford Shank & Co., and the proceeds will be utilized to fund those expansions to the airport as well as refund grant anticipation bonds and commercial paper notes.

Williamson drives deal

Heading up the light primary action on the Monday was a competitive offering from Williamson County in Texas. The county priced $76.86 million of series 2011 unlimited tax road bonds, said a pricing sheet.

The bonds (Aa2/AAA/AAA) are due 2012 to 2013 and 2016 to 2036 with coupons from 2% to 5%.

Proceeds will be used to fund road improvements.

The county seat is Georgetown.

New York State preps sale

Leading Tuesday's primary calendar, the State of New York is set to bring $830.845 million of series 2011 general obligation bonds via competitive bid.

The offering includes $478.915 million of series 2011A tax-exempt bonds, $21.825 million of series 2011B taxable bonds, $231.9 million of series 2011C tax-exempt refunding bonds and $98.205 million of series 2011D taxable refunding bonds.

Proceeds will be used to finance environmental initiatives, for capital expenditures and to refund debt.

New York water bonds ahead

Also coming on Tuesday, the New York City Municipal Water Finance Authority is expected to price for institutional investors $400 million of series 2011GG water and sewer system second general resolution revenue bonds through M.R. Beal & Co. A retail order period was conducted on Monday.

The bonds are due 2012 to 2026.

Proceeds will be used to construct, acquire and expand the city's water and sewer system.

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