Yields end flat to weaker as market awaits new deals; King County, Wash., brings $403.04 million

By Sheri Kasprzak

New York, Aug. 22 - Municipals were a touch off on Monday as the biggest deal of the week came to market a day early, market insiders reported.

Yields were seen flat to slightly off, said traders. Twenty-year yields were up nearly 3 basis points, but 15-year yields were down more than 1 bp.

"We fared better than Treasuries," said one trader reached during the session.

"I think there's some firmness to the market, but there's little activity to push us."

Meanwhile, Tom Kozlik, municipal credit analyst with Janney Montgomery Scott LLC, reported Monday that primary municipal issuance should total about $3.7 billion for the week, compared with the $6.3 billion issued last week.

"Historically low municipal yields continued at the end of last week, with the 10-year AAA benchmark closing at 2.15% and the 30-year ending Friday at 3.79%," Kozlik noted in his daily report.

King County sells bonds

Heading up Monday's light primary action, King County in Washington came to market a day early with its $403.04 million sale of series 2011B sewer revenue and refunding bonds. The offering was slated to price on Tuesday but was opened to institutional investors Monday.

The bonds (Aa2/AA+/) were issued through J.P. Morgan Securities LLC.

The bonds are due 2012 to 2031 with term bonds due 2034 and 2041. The serial coupons range from 1% to 5.25%. The term bonds have 5% coupons.

Proceeds will be used to fund improvements to the county's sewer system and to refund the county's series 2001 sewer revenue and refunding bonds, series 2002A sewer revenue bonds and 2002B sewer revenue and refunding bonds.

California to price $5.4 billion

Kozlik noted in his report Monday that the State of California could come to market with a $5.4 billion sale of revenue anticipation notes (A1/A-/A-) during the week of Sept. 12.

The state has been virtually absent from the primary market this year, Kozlik noted.

Proceeds from the deal will be used to pay off the state's $5.4 million bridge loan. The state secured the loan as a precaution in late July during the Congressional debt-ceiling talks.

"The California Department of Finance reported that July general fund revenue came in 9% lower than budgeted amounts," Kozlik wrote.

"Automatic spending adjustments will be made if revenue shortfalls continue."

New Jersey sports deal planned

Looking to Tuesday's primary offerings, the New Jersey Sports & Exposition Authority is slated to sell $88.59 million of series 2011 state contract refunding bonds on a competitive basis.

The deal includes $45.51 million of series 2011A bonds and $43.08 million of series 2011B bonds.

The 2011A bonds are due 2013 to 2024, and the 2011B bonds are due 2013 to 2025.

Proceeds from the sale will be used to fund capital projects and to refund existing debt.

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