Munis close flat to firmer; Connecticut brings $353.09 million; MIT preps $500 million sale

By Sheri Kasprzak

New York, May 6 - Municipals retained their firm tone on Friday even as issuance stalled and trading volume remained light, said traders.

"I'd call it flat to firmer," said one trader. "In spots, we're a basis point lower. It's been a quiet day."

Guy LeBas, chief fixed-income strategist with Janney Montgomery Scott LLC, said Friday that Treasuries are boosting municipals.

"The municipal markets posted a remarkable 18th straight day of improvement on Thursday, following Treasury yields lower with declines of 5 to 7 bps, with the biggest moves on the long end," LeBas said.

"Although muni to Treasury ratios have been somewhat volatile, they're trading within spitting distance of mid-March levels, indicating that the bulk of the recent rally has been the result of falling Treasury yields rather than changing perceptions of the muni markets. Still, given the low supply outlook, tax-exempt yields are likely to be slower to respond to the upside if and when Treasuries reverse course."

Connecticut brings G.O.s

On the primary front, the State of Connecticut released the details of its $353.085 million of series 2011 general obligation bonds in an official statement on Friday.

The deal priced Thursday and included $337.62 million of series 2011A Sifma index G.O. bonds and $15.465 million of series 2011A taxable G.O. bonds

The 2011A bonds are due 2012 to 2018 with coupons from the Sifma rate minus 1 bp to Sifma plus 92 bps. The 2011A taxable bonds are due May 18, 2012 and have a 1% coupon to yield 0.45%.

Morgan Stanley & Co. Inc. and Siebert Brandford Shank & Co. LLC were the senior managers.

Proceeds will be used to retire existing bond anticipation notes.

The state also announced plans Friday to return to the market with $326.915 million of series 2011 G.O. bonds through M.R. Beal & Co. Inc.

The deal includes $237.87 million of series 2011B tax-exempt G.O. bonds and $89.045 million of series 2011B taxable G.O. bonds.

The 2011B tax-exempt bonds are due 2019 to 2023, and the 2011B taxable bonds are due 2012 to 2015.

Proceeds will be used to fund capital requirements and to retire bond anticipation notes.

Virginia transportation ahead

Heading up the coming week's larger primary calendar, the Commonwealth Transportation Board of Virginia is poised to price $600 million of series 2011 transportation capital projects revenue bonds (//AA+) competitively on Wednesday.

The bonds are due 2012 to 2036, and proceeds will be used to fund transportation infrastructure projects.

MIT plans sale

Also in the week ahead, the Massachusetts Institute of Technology is scheduled to price $500 million of series 2011 taxable bonds, said a preliminary official statement. Pricing is expected for Thursday.

The bonds (Aaa/AAA/) will be sold on a negotiated basis with Barclays Capital Inc. as the lead manager.

Proceeds will be used to support current or future capital plans and to refinance existing debt.

The institute is based in Cambridge, Mass.

Dasny preps school bonds

In other upcoming sales during the week, the Dormitory Authority of the State of New York is expected to price $332.88 million of series 2011 school districts revenue bond financing revenue bonds through Jefferies & Co. and RBC Capital Markets LLC.

The offering includes $267.825 million of series 2011A bonds (A1/A+/A+), $39.75 million of series 2011B bonds (A3/A+/A+), $7.885 million of series 2011C bonds (Aa3/A+/A+) and $17.42 million of series 2011D bonds (A2/A+/A+).

Proceeds will be used to finance school district capital facilities and capital equipment and to refinance bond anticipation bonds.

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