Munis flatten; market waits on supply; New Jersey Continental deal draws high-yield interest

By Cristal Cody

Tupelo, Miss., Aug. 6 - Municipals traded flat as Treasuries closed nearly unchanged on Monday ahead of about $5 billion of supply in the muni market and $72 billion of government bond auctions.

The benchmark 10-year Treasury note yield ended flat at 1.56%.

"We're flatter," said Steve McLaughlin, executive vice president at R. Seelaus & Co. "The market never really opened up very much today. We have a decent new issue calendar this week, and usually Mondays in the summertime are half-staffed."

The 10-year municipal bond yield traded unchanged at 1.66% on Monday.

One highly anticipated deal for the week is expected from the New Jersey Economic Development Authority, which plans to sell $734 million of bonds for Continental Airlines Inc.

"It's going to be a very well-received deal to aid the high-yield funds in looking for merchandise," McLaughlin said. "High-yield funds are flush with cash, and that will provide much-needed supply in the high-yield area."

Other municipal bond deals on the week's calendar include $1.65 billion of future tax secured bonds from the New York City Transitional Finance Authority, a $658.5 million offering of general obligation bonds from Minnesota and a $271 million deal from Mississippi.

Washington is scheduled to price $703.27 million of G.O. refunding bonds through a competitive sale on Tuesday.

"The high-grade issues should provide some well-needed price discovery for the market," McLaughlin said.

Mississippi issue ahead

Mississippi is expected to price its previously reported offering of $270,955,000 of G.O. refunding bonds (Aa2/AA/AA+) this week, a bond source said on Monday.

The offering includes $73.16 million of series 2012E bonds due Dec. 1, 2012 and 2015-2025 and $197,795,000 of series 2012F bonds due Nov. 1, 2012 and 2016-2025, according to a preliminary official statement.

Citigroup Global Markets Inc. is the bookrunner for the series 2012E bonds.

Raymond James/Morgan Keegan is the bookrunner for the series 2012F bonds.

The co-managers are Duncan-Williams, Inc., Loop Capital Markets LLC and Stephens Inc.

Proceeds will be used to advance refund and defease outstanding G.O. bonds.

New Jersey Environmental Infrastructure Trust to price

Later in the month, the New Jersey Environmental Infrastructure Trust will be in the market with a three-tranche offering of $208.76 million of environmental infrastructure refunding bonds (Aaa/AAA/AAA), according to a preliminary official statement.

The deal includes $198.42 million of series 2012A-R bonds with serial maturities from 2013 through 2026, $1.28 million of series 2012B-R bonds due 2013 through 2021 and $9.06 million of series 2012C-R bonds due 2013 through 2023.

The bonds will price through a competitive sale on Aug. 14.

Public Financial Management, Inc. is the financial adviser.

Proceeds will be used to refund outstanding bonds.

Colorado Health too

A new offering also is in the works from Colorado Health Facilities Authority, which intends to price $155,745,000 in three tranches of revenue and refunding bonds (/BBB-/BBB+) for Covenant Retirement Communities, Inc., according to a preliminary official statement.

The offering includes $107.04 million of series 2012A bonds, $23,585,000 of series 2012B bonds and $25.12 million of series 2012C bonds.

Ziegler Capital Markets Inc. will manage the negotiated sale.

Proceeds will be used to finance the acquisition, construction, renovation, remodeling and equipping of retirement communities and to refund outstanding revenue bonds.

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