Municipals end day cheaper; Dasny to offer $1 billion of sales tax revenue bonds

By Sheri Kasprzak

New York, Oct. 15 - The municipals market had a cheaper tone at the end of the session, market sources reported, with wider bid/ask spreads following the light primary calendar and the holiday.

"Bid/ask spreads are wider, mostly because there's not a lot going on," a trader said during the session.

Although the calendar will pick up as the week progresses, primary action was fairly light on Tuesday after the Columbus Day holiday. About $5 billion of new offerings will hit the market during the week, including a $1 billion sales tax revenue bond deal from the Dormitory Authority of the State of New York.

Dasny sale set

The Dasny offering will be conducted through senior managers J.P. Morgan Securities LLC, Citigroup Global Markets Inc., Loop Capital Markets LLC and RBC Capital Markets LLC.

The bonds (/AA/AAA) will be utilized to finance capital projects at the State University of New York, fund environmental remediation projects and fund library projects.

"The sales tax bonds are secured by revenues from one of the four cents of statewide sales tax collected by New York," said Alan Schankel, managing director with Janney Montgomery Scott LLC.

"By securing the bonds with appropriations from sales tax revenue as opposed to general fund sources, the bonds carry a higher rating and the state will realize lower borrowing costs."

Battery Park deal set

Another major offering for the week is a $360.33 million bond offering from the Battery Park City Authority of New York.

That deal includes $353,435,000 of series 2013A tax-exempt bonds due 2014 to 2026 and $6,895,000 of series 2013B taxable bonds.

The bonds (Aaa//AAA) will be sold through Citigroup Global Markets Inc. and Ramirez & Co. Inc., and proceeds will be used to finance capital improvements to Battery Park City and to refund existing debt.

"The Battery Park bonds are senior and junior lien with security provided by ground rents on the commercial and residential buildings comprising Battery Park City, which include Goldman Sachs' and NY Mercantile Exchange's headquarters," Schankel said.

"Debt service coverage is very strong, averaging 4.66x on the seniors and 2.71x on the juniors over the past five fiscal years."

North Slope bonds price

Amid the light primary action Tuesday, the North Slope Borough of Alaska sold $100,775,000 of series 2013A general obligation bonds, said a pricing sheet.

The bonds (Aa3/AA-/AA-) were sold through KeyBanc Capital Markets LLC.

The bonds are due 2014 to 2023 with 1% to 5% coupons.

Proceeds will be used to construct, acquire and equip public facilities, including administrative buildings, education facilities, sewage treatment facilities and airport facilities.

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