Municipals rally as new issues hit the market; Colorado brings $500 million short-term notes

By Sheri Kasprzak

New York, July 10 - Municipals rallied, breaking a lull, after new issues came to market and Treasuries rallied on Tuesday, market insiders reported.

Yields were reportedly better by 1 basis point to 5 bps in the afternoon, according to a trader.

"New deals are coming in pretty well, and investors seem to be coming back to the market, especially retail," the trader said.

Leading the new issue activity, the State of Colorado brought $500 million of series 2012A general fund tax and revenue anticipation notes.

The deal included $370 million of 2.5% notes due June 27, 2013 that priced at 102.188, $30 million of 2% notes due June 27, 2013 that priced at par and $100 million of 2% notes due June 27, 2013 that priced at 101.715.

The notes (MIG 1/SP-1+/) were sold competitively. J.P. Morgan Securities LLC won the largest chunk of the offering, $370 million, with a 0.183447% true interest cost. Goldman Sachs & Co. won the bid for $100 million of the notes with a 0.180941 TIC. Morgan Stanley & Co. LLC won the bid for $30 million of the notes with a 0.180941% TIC, according to a source close to the sale.

"There were three bidders who took portions of the notes, but it was just sold as a single offering," the insider said.

Proceeds will be used to finance anticipated cash shortfalls in the 2012-2013 fiscal year.

L.A. MTA brings debt

In other primary action on Tuesday, the Los Angeles County Metropolitan Transportation Authority priced $93.87 million of series 2012 Proposition C sales tax revenue refunding bonds, said a pricing sheet.

The offering included $12,305,000 of series 2012A senior bonds and $81,565,000 of series 2012B senior bonds.

The 2012A bonds are due 2027 to 2028 with 3% to 3.125% coupons, both of which were priced at 99. The 2012B bonds are due 2020 to 2025 with 5% coupons.

The bonds (Aa3/AA+/) were sold competitively. Barclays Capital Inc. won the bid with a 2.56% true interest cost, said Rick Jager, spokesman for the authority.

Market conditions were a significant factor in the authority's decision to sell its debt competitively, said Jager.

Proceeds will be used to refund the authority's series 1999A and 2009C revenue bonds.

Las Vegas water deal ahead

One of the larger offerings expected Wednesday comes from the Las Vegas Valley Water District, which plans to sell $399.34 million of general obligation bonds through Citigroup Global Markets Inc. and JPMorgan.

The offering includes $39.34 million of series 2012A limited tax water refunding bonds and $360 million of series 2012B limited tax water bonds.

Proceeds from the sale will be used to acquire and construct water resource facilities for the Southern Nevada Water Authority and to refund some of the district's existing water bonds.

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