Municipals end flat ahead of new supply; Broward County School, Fla., sells $175 million

By Sheri Kasprzak

New York, May 20 - Municipal yields closed the week mostly flat, traders said, after breaking a nearly month-long rally. On Thursday, yields in the intermediate portion of the curve were seen higher by as much as 6 basis points, due in part to profit-taking.

"It looks like we're stable," said one trader reached in the afternoon.

"I wouldn't even say the rally is over. There's still a good deal of demand [for munis], and I think with the increase in supply, yields will go even lower."

Another trader agreed that Thursday's gains were temporary.

"There are a lot of technical reasons why yields climbed back up," he said. "I don't think it's a reversal in any way."

Meanwhile, Tom Kozlik, municipal credit analyst, said Friday that the U.S. Treasury Department helped make a case to bring back Build America Bond-like taxable municipals in a report released earlier in the week.

"The report pointed out that BABs saved issuers an average of 84 bps on interest costs compared to traditional tax-exempt financing, resulting [in] an estimated $20 billion of borrowing costs, a level considerably greater than the net costs to the federal government," Kozlik said.

Kozlik noted that president Barack Obama proposed reinstating BABs in his fiscal year 2012 budget proposal with a revenue neutral 28% subsidy.

Broward bonds price

In light primary action Friday, the Broward County School Board of Florida sold $175.51 million of series 2011A certificates of participation, according to a pricing sheet.

The COPs (Aa3/AA+/) were sold through Citigroup Global Markets Inc.

The certificates are due 2012 and 2018 to 2024 with 2% to 5.25% coupons.

Proceeds will be used to refund portions of the board's outstanding series 1997B, 2001A and 2001B certificates.

Nassau preps two sales

Looking to the week ahead, Nassau County, N.Y., is coming to market with two competitive offerings - one an offering of G.O. revenue anticipation notes and one an offering of general improvement G.O. bonds.

Both the RANs and the general improvement G.O.s will be sold competitively on Wednesday with Public Financial Management, Inc. as the financial adviser.

The county will sell $230 million of series 2011 G.O. RANs (/SP-1+/F1+). That deal includes $155 million of series 2011A notes, which are due March 30, 2012, and $75 million of series 2011B notes, which are due April 30, 2012.

Proceeds will be used to fund capital requirements ahead of the collection of net allocable sales tax.

Nassau G.O.s set as well

Also coming on Wednesday, the county will price $82.045 million of series 2011A general improvement G.O. bonds, according to a preliminary official statement.

The bonds (A1/A+/AA-) are due 2012 to 2036.

Proceeds will be used to fund capital projects and judgments and settlements.

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