Municipals flat as buy side quiets, deal calendar light; Maryland plans $727.92 million sale

By Cristal Cody

Tupelo, Miss., July 20 - Municipal bonds stayed slightly tighter in light trading on Friday as primary action stopped ahead of the weekend, informed bond sources said.

"It's a little on the tight side but it's light seeing it's a Friday," a trader said. "Activity levels are super-weak right now. The buy side is very quiet. Not really much has traded."

Only a handful of deals are scheduled for the upcoming week.

"Next week seems like it's a light week from a forward calendar perspective," one bond source said. "One big deal and that's really the most of it."

The Commonwealth of Pennsylvania plans to sell $361.3 million of series 2012 first refunding general obligation bonds (Aa2//) competitively on Tuesday.

Bond refundings continue to make up a "pretty large percentage of the new issuance market and I have to imagine that issuers are going to be scrambling to take advantage of the lower rates we've seen over the past week or two," another municipal bond source said.

One large offering is on the horizon from the State of Maryland, which plans to bring $727.92 million in five tranches of general obligation bonds, according to a preliminary official statement.

The second series 2012 state and local facilities loan bonds (Aaa/AAA/AAA) include $75 million of second series A bonds, $430 million of second series B bonds, $20 million of second series C bonds, $15.32 million of second series D bonds and $187.6 million of second series E refunding bonds.

The series A and B bonds have serial maturities from 2015 through 2027. The series C bonds are due 2015, the series D bonds are due 2027 and the series E bonds have maturities from 2018 through 2020.

Citigroup Global Markets Inc. is the senior manager of the negotiated sale. Co-managers are Bank of America Merrill Lynch, J.P. Morgan Securities LLC, M&T Securities, Inc., Siebert Brandford Shank & Co., LLC, Barclays Capital Inc., Goldman, Sachs & Co., Loop Capital Markets LLC, Raymond James/Morgan Keegan and RBC Capital Markets Corp.

Proceeds will be used for public purposes, including to acquire and construct state facilities, for capital grants to local governments, to match loans and grants to local governments, nonprofit institutions and other entities, for capital grants to local education agencies for public school renovations and to purchase federal securities for the advance refunding of outstanding general obligation bonds.

Inova to sell $350 million

In other deals coming up, the Industrial Development Authority of Fairfax County, Virginia plans to price $350 million of health care revenue bonds (expected ratings of Aa2/AA+/) for Inova Health System, according to a preliminary official statement.

The deal includes $290 million of series 2012A bonds and $60 million of series 2012B bonds.

Morgan Stanley & Co. LLC is the senior manager of the negotiated sale. Co-managers are Citigroup Global Markets Inc., TD Securities (USA) LLC, BB&T Capital Markets LLC, Raymond James/Morgan Keegan and Edward D. Jones & Co. LP.

Proceeds will be used to finance new hospital additions.

Nissan plans refunding bonds

Down South, the State of Mississippi intends to price $100,585,000 of general obligation refunding bonds for the Nissan North America, Inc. project, according to a preliminary official statement.

The series 2012C bonds (Aa2/AA/AA+) are due Nov. 1, 2017.

Morgan Stanley & Co. LLC will manage the negotiated sale.

Proceeds will be used to fund the conversion of a portion of the series 2003A-B variable-rate general obligation bonds from a weekly interest rate to a Libor index interest rate mode through a current refunding of the bonds.

Mississippi to sell G.O. bonds

Mississippi also plans to sell $78.72 million of general obligation refunding bonds, according to a preliminary official statement.

The series 2012D bonds (Aa2/AA/AA+) are due Sept. 1, 2017.

Morgan Stanley & Co. LLC will manage the negotiated sale.

Proceeds will be used to fund the conversion of the series 2005 and series 2007 variable-rate general obligation capital improvements bonds from a weekly interest rate to an adjusted Sifma rate by a current refunding of the bonds.

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