Municipals close flat ahead of new offerings; Puerto Rico bank to price $500 million of notes

By Sheri Kasprzak

New York, May 9 - Municipals were largely unchanged on Monday to kick off a week with more primary supply than the market has seen in the past several weeks, market insiders said.

"I'd call it unchanged, but I get the sense that with supply coming this week, yields are going to be heading up," said one trader.

"There's been no pressure, but now things are picking up, and I suspect yields are going to climb a bit this week. So far, we're flat."

The negotiated market this week will feature $3.6 billion of issuance, said Tom Kozlik, municipal credit analyst with Janney Montgomery Scott LLC. Even more will come to market via the competitive route.

The two major offerings of the week will hit the market on Wednesday, led by a $600 million sale of series 2011 transportation capital projects revenue bonds from the Commonwealth Transportation Board of Virginia. Those bonds (//AA+) will price competitively, and the proceeds will be used to fund transportation infrastructure projects.

Also coming on Wednesday, the Government Development Bank of Puerto Rico is scheduled to hit the market with $500 million of series 2011 senior taxable notes, said a preliminary official statement and sales calendar.

The notes (A3) will be sold on a negotiated basis with Bank of America Merrill Lynch as the senior manager.

Proceeds from the offering will be used to increase the development bank's investment portfolio, to make loans to and purchase obligations of the commonwealth and its public operations, instrumentalities and municipalities and to redeem outstanding notes.

Dasny school bonds ahead

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

The proceeds will be used to finance school district capital facilities and capital equipment and to refinance bond anticipation notes.

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+).

Oregon deal planned

Looking ahead, the State of Oregon plans to come to market during the week of May 16 with $320.405 million of series 2011 general obligation bonds, said a preliminary official statement.

The offering includes $7.095 million of series 2011I seismic grant bonds, $158.365 million of series 2011J state property bonds, $61.22 million of series 2011K Oregon Department of Transportation bonds and $93.725 million of series 2011L refunding bonds.

The bonds (Aa1/AA+/AA+) will be sold on a negotiated basis with Citigroup Global Markets Inc. and Bank of America Merrill Lynch as the senior managers.

The 2011I bonds are due 2012 to 2031 with a term bond due in 2036. The 2011J bonds are due 2012 to 2031 with a term bond due in 2036. The 2011K bonds are due 2013 to 2031 with a term bond due in 2036. The 2011L bonds are due 2014 to 2026.

Proceeds will be used to fund a seismic study, improvements to state property and improvements for the state department of transportation and to refund the state's series 2001B bonds.

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