Munis end mixed as supply drops; Livermore-Amador releases details of $105.35 million sale

By Sheri Kasprzak

New York, Sept. 29 - Municipals closed out Thursday on a mixed note as investors picked through a significantly lighter primary calendar, said market insiders.

The short end of the curve was firmer, with yields down by 1 basis point to 3 bps. In the middle, however, things took on a softer tone, with yields on 10-year bonds seen up by 5 bps. Longer bonds fared better, with 30-year yields seen flat.

"It's a lack of supply," said one trader when asked about the softer tone, especially in the intermediate portion of the curve.

Ten-year bonds have been a problem for a while, said Alan Schankel, managing director with Janney Montgomery Scott LLC.

"For the third day in a row, muni yields follow Treasuries higher, with the biggest change in the 10-year area of the curve, which is higher in yield by 21 bps since last Friday, compared to an 11 bps rise for the 30-year muni benchmark," Schankel wrote in a report released Thursday morning.

"The recent increase in supply has added upward pressure to ratios, but mutual fund investors have been taking advantage of tax-free yields trading above taxable alternatives."

Livermore details deal

Elsewhere, Tom Lockard with Stone & Youngberg LLC, the financial adviser for the Livermore-Amador Valley Water Management Agency, said Thursday that Bank of America Merrill Lynch purchased the issuer's $105.345 million of series 2011 sewer revenue refunding bonds, which priced Wednesday.

"Given market conditions today, I'm sure Bank of America Merrill Lynch doesn't feel as if they won the auction," said Lockard.

The true interest cost for the bonds came in at 3.82%. The cover bid came from Barclays Capital Inc. with a 3.92% TIC.

The bonds are due 2012 to 2031 with 2% to 5% coupons, and proceeds from the sale will be used to refund the agency's series 2001 sewer revenue bonds.

IDA of Yavapai sells bonds

In other news Thursday, the Industrial Development Authority of the County of Yavapai, Ariz., sold Thursday $72.175 million of series 2011 hospital revenue refunding bonds for Northern Arizona Health Care System, said a pricing sheet.

The bonds (/AA-/) were sold through Bank of America Merrill Lynch.

The bonds are due 2012 to 2026 with 2% to 5.25% coupons.

Proceeds will be used to refund the health-care system's series 1996A and 1998 hospital revenue bonds.

Dasny preps PITs sale

Coming up next week, the Dormitory Authority of the State of New York is scheduled to come to market Tuesday with $515.58 million of series 2011 state personal income tax revenue bonds, said a preliminary official statement.

The bonds will be sold competitively.

The deal includes $467.25 million of series 2011E tax-exempt bonds and $48.33 million of series 2011F taxable bonds.

Proceeds will be used to finance grants to libraries, state and voluntary agency facilities; to construct a state court officers' training academy; to implement a state longitudinal data system and to fund economic development grants under various programs.

North Carolina to bring bonds

Also in the week ahead, the State of North Carolina is poised to bring $395.565 million of series 2011B limited obligation refunding bonds on Wednesday, said a preliminary official statement.

The bonds will be sold competitively with First Southwest Co. as the financial adviser.

The bonds are due 2014 to 2024.

Proceeds will be used to refund the state's series 2003 lease purchase revenue bonds, series 2003A certificates of participation, series 2004 lease purchase revenue bonds, series 2004A-B COPs, series 2005 COPs and series 2006A COPs.

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