Municipals close flat ahead of three-day weekend; Dasny preps for $684.28 million bond sale

By Sheri Kasprzak

New York, May 27 - Municipal yields were unchanged as the market prepared to go on hiatus for Memorial Day. With a short day, little was accomplished, said one trader reached during the session.

"It is a ghost town," he joked of the quiet day. "Very, very little trading. It's definitely flat."

Meanwhile, the belly of the yield curve continues to hold on to its rally, said J.R. Rieger, vice president of fixed-income indexes at Standard & Poor's.

"The five- to 10-year range of municipal bonds has been seeing the biggest yield shift," Rieger said in a report released Friday.

"Investment grade, tax-exempt bonds maturing in 2017 as measured by the S&P AMT-Free Municipal Series 2017 index saw yields come down or improve by 31 bps so far on the month. These six-year bonds have seen a positive total return of 4.1% for the year. Similar shifts in yields were seen in the six- to 10-year range overall as the S&P AMT-Free Municipal Series 2020 index has returned 5.57% year-to-date."

Dasny preps offering

Looking to the coming week's primary activity, the Dormitory Authority of the State of New York plans to price $684.275 million of series 2011 general purpose state personal income tax revenue bonds on Thursday, said a preliminary official statement.

The offering includes $653.85 million of series 2011A tax-exempt bonds and $30.425 million of series 2011B taxable bonds.

The maturity dates have not been set.

The bonds (/AAA/AAA) will be sold competitively with Public Financial Management, Inc. as the financial adviser.

Proceeds will be used to finance some state matching grants under the HECap program, grants under the HEAL NY grant program, capital projects at the City University of New York senior college facilities and community college facilities, grants under the Excel program, contributions to the costs of the remediation of hazardous waste sites, various environmental infrastructure projects and water pollution control projects.

New York Environmental ahead

The New York State Environmental Facilities Corp. is expected to come to market with $510.6 million of series 2011B state clean water and drinking water revolving fund revenue bonds for the New York City Municipal Water Finance Authority, said a preliminary official statement. Pricing is expected during the week of May 30.

The bonds (Aa1/AA+/AA+) will be sold through senior managers Morgan Stanley & Co. Inc. and Jefferies & Co.

The bonds are due 2012 to 2041.

Proceeds will be used to provide financial assistance to the New York City Municipal Water Finance Authority to finance or refinance water pollution control and drinking water projects and to refund certain bonds.

L.A. plans TRANs sale

Although the pickings for the next week are slim, a larger offering is out on the horizon. Los Angeles County of California announced Friday that it plans to price $1.3 billion of series 2011-12 tax and revenue anticipation notes.

The notes will be sold through senior manager J.P. Morgan Securities LLC, said a preliminary official statement.

The notes will be divided into three tranches, but the maturities have not been set.

Proceeds will be used to finance cash flow requirements ahead of the collection of taxes and revenues.

Energy Northwest to sell bonds

Also ahead, Energy Northwest of Washington state plans to bring $421.78 million of revenue and refunding bonds, said a preliminary official statement.

The deal includes $3.085 million of series 2011C Columbia Generating Station taxable electric revenue bonds, $156.02 million of series 2012A Project 1 electric revenue refunding bonds, $194.53 million of series 2012A Columbia Generating Station electric revenue refunding bonds and $68.145 million of series 2012A Project 3 electric revenue refunding bonds.

The bonds will be sold through Citigroup Global Markets Inc. and Bank of America Merrill Lynch.

The 2011C Columbia Generating Station taxable bonds are due July 1, 2019. The 2012A Project 1 refunding bonds are due 2013 to 2017, and the 2012A Columbia Generating Station refunding bonds are due 2018 to 2021. The 2012A Project 3 bonds are due July 1, 2018.

Proceeds will be used to pay costs associated with operating the Columbia Generating Station and to refund existing Project 1, Columbia Generating Station and Project 3 revenue bonds.

Energy Northwest is an electric utility based in Richland, Wash.

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