Municipal yields improve as new issues gobbled up; Cook County, Ill., plans highway bonds

By Sheri Kasprzak

New York, Nov. 27 - Municipal yields were firmer and yields dropped to new record lows as primary action received an excellent reception and secondary activity picked up, market insiders reported.

Yields, which had been edging lower recently, fell by about 3 basis points to 5 bps across the yield curve, one trader reported during the session.

"Primary is really dominating, but secondary is also picking up," said a trader.

"We're seeing a lot of trades today, comparatively. Here lately, it has been the new issues that are pushing the tone, but today, it was secondary as well."

Demand for new deals remains strong, said Alan Schankel, managing director with Janney Montgomery Scott LLC.

"The 30-year benchmark yield finished at 2.52%, a new low [Monday]," Schankel said.

"With the 30-year Treasury yield at 2.8%, the muni-to-Treasury ratio has been at 90% for the past four sessions, the lowest of the year ... We expect investor demand to remain strong in December, with more than $21 billion in proceeds available from maturing bonds and pre-refunded calls."

Cook County deal on tap

In upcoming offerings, Cook County, Ill., announced Tuesday that it plans to come to market with $90 million of county road and highway improvement sales tax revenue bonds.

The bonds (//AAA) will be sold with Wells Fargo Securities LLC as the senior manager.

The offering is a departure from the county's pay-as-you-go funding plan.

"We are confident that this innovative financing saved significant taxpayer dollars by providing an extremely attractive interest rate, and this will help fund crucial infrastructure projects throughout Cook County," said Tariq Malhance, chief financial officer of Cook County.

The offering, according to Cook County Board president Toni Preckwinkle, is part of the county's broader strategic focus.

"We have made great strides in my administration to leverage our financial tools more effectively to pursue critical infrastructure projects throughout Cook County," Preckwinkle said in a news release.

"This innovative new financial strategy is an effective and efficient means to fund our needed road projects."

Proceeds from the offering will be used to finance road, bridge and highway infrastructure projects as part of the county's 2012 -2014 highway transportation plan.

Miami-Dade sale ahead

Heading up the week's new issues, Miami-Dade County will hit the market Wednesday with $808.45 million of aviation bonds, one of two deals out of the county this week.

The deal will be conducted in two tranches, with $700,435,000 of AMT bonds and $108,015,000 of non-AMT bonds.

Bank of America Merrill Lynch leads the syndicate offering the bonds, and proceeds will be used to purchase direct government obligations.

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