Municipals close little changed as primary dominates; Nevada sells $68.8 million revenue bonds

By Sheri Kasprzak

New York, April 24 - Municipals were mostly unchanged on Tuesday as several new issues came to market, said traders reached during the session.

Secondary activity was very modest, according to one trader, as new issues took attention away from that segment of the market.

"There's not much going on in terms of trading," said the trader.

"Secondary is very quiet, but what's pricing seems to be getting a good reception. Solid pricing from what I've seen."

Yields were seen slightly firmer, by 1 to 2 basis points, but with little activity in secondary, there wasn't more movement than that, according to a trader.

Nevada sells revenue bonds

In primary action during the day, the State of Nevada priced $68,795,000 of series 2012 motor vehicle fuel tax highway revenue bonds, according to a pricing sheet.

The bonds (Aa2/AA+/AA+) were sold competitively with Bank of America Merrill Lynch winning the bid. The true interest cost came in at 1.39%, chief deputy treasurer for the state Mark Mathers said in an interview Tuesday.

The bonds are due 2012 to 2019 with 2.5% to 5% coupons.

"Neither state law nor state debt management statute requires us to bid them competitive," Mathers noted.

"Our prior two sales were negotiated. Our state agencies' polices outline conditions for when competitive is considered appropriate. If it's complex in nature or needs a little more proactive salesmanship, if market conditions are volatile so that timing is important, those and many other reasons are things to consider when you think about going competitive."

Proceeds will be used to refund the state's series 2004 highway improvement revenue bonds.

Spreads down from prior sale

The state, according to Mathers, has made some strides in improving its relations with investors.

"Nevada entities have a bit of negative headline risk given the economic conditions Nevada has faced with the recession," said Mathers.

"We've made proactive efforts to reach out to investors, telling our story, talking about special and unique facets of Nevada from a credit standpoint. We've seen the successful results of those efforts; spreads have come significantly down from what they were. Overall, spreads have tightened, but in addition to that, that's been an effort of our office."

Part of that process, Mathers said, has been speaking with mutual funds to show that the state is fiscally conservative and has a very modest amount of debt that will be repaid with property tax revenues.

As an example of that, 12 to 13 bidders showed interest in the deal, according to Mathers.

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