Munis round out week unchanged after struggling; New York City Transitional Finance sets deal

By Sheri Kasprzak

New York, April 1 - It wasn't an April Fool's prank. The municipals market finally closed out unchanged after two weeks of beatings, market insiders reported. Even with a supply drought, traders said they're at a loss about how to move the light inventory.

"Nothing's selling and nothing's trading," summed up on trader reached Friday afternoon.

"It's been a very quiet day. There's not enough going on to really push us one way or the other, but the softer tone is still there."

The trader said that an increase in supply, which he readily expects to see in the coming months, will not matter at all unless retail comes back to the market.

"It won't make a difference if there's no one there to buy," he noted.

NYC Transitional deal ahead

The week ahead will provide some larger offerings including a $500 million sale of series 2011 future tax secured subordinated bonds from the New York City Transitional Finance Authority.

The bonds (Aa1//AAA) will be sold through senior manager Wells Fargo Securities LLC.

The sale includes $483 million of series 2011E bonds, which are due 2012 to 2025, and $17 million of series 2011 F bonds, which are due 2011 to 2025.

Proceeds from the offering will be used to redeem existing future tax secured bonds.

Chicago O'Hare bonds on again

After being grounded at least twice, the City of Chicago's $1 billion sale of series 2011 passenger facility charge revenue bonds for the Chicago O'Hare International Airport is yet again ready to take off. The deal is set to go during the week of April 18.

Citigroup Global Markets Inc. and Siebert Brandford Shank & Co. LLC are the senior managers.

Proceeds from the offering will be used to make capital improvements at the airport, to refund grant anticipation bonds and commercial paper notes and to make debt service payments.

The offering was postponed in February after United and American airlines filed a lawsuit to stop the renovations the bond sale would finance for fear that the upgrades would cost them millions in out-of-pocket costs. The airlines contended that the city had not sought their approval for the bond sale. The suit was later dropped.

D.C. plans Howard deal

Coming up in the week ahead, the District of Columbia is scheduled to come to market with $288.965 million of series 2011 revenue bonds for Howard University, said Alan Schankel, managing director at Janney Montgomery Scott LLC.

The sale includes $224.23 million of series 2011A bonds and $64.735 million of series 2011B bonds.

Merrill Lynch and Loop Capital Markets LLC will bring the bonds to the table.

Proceeds will be used to fund general upgrades, additions and construction to three of the university's campuses and to refund and advance refund some of the university's debt including its series 1998 and 2006A bonds.

Pensions drift lower

Schankel said Friday that, according to Standard & Poor's, despite equity market recovery, the funded ratios of state pensions continue to drift lower, putting more budget pressures on many states.

"New York is the best funded at 102%, while Illinois scraped bottom at 51%, and Puerto Rico is somewhere in the sub-basement at 9% funding," Schankel said.

"Other notable states are Florida (at 87.1%), Connecticut (at 61.6%), New Jersey (at 66%) and Pennsylvania (at 80.8%)."

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