Munis close unchanged; $14 billion of volume expected; Michigan Finance, Dasny deals ahead

By Sheri Kasprzak

New York, June 11 - Municipals rounded out Monday mostly flat ahead of a large slate of new issues, market insiders reported.

"Yields didn't move by much, but it seems like the overall tone is softer," one trader said.

"There's not a whole lot of buying going on. Last week's supply isn't being absorbed so quickly, and that gives us this feeling that more trouble is looming this week."

The coming week will include a whopping $14 billion of new issues, compared with roughly $10 billion in the previous week - but that number is misleading, said Tom Kozlik, municipal credit analyst with Janney Montgomery Scott LLC.

"The total municipal primary market calendar, including competitive and negotiated issues, is expected to rise to over $14 billion this week, though the number is a bit misleading as almost half is made up by only four issues," Kozlik said Monday.

Leading those offerings is a $2.7 billion deal from the Michigan Finance Authority, which plans to bring its series 2012 unemployment assessment revenue bonds through Citigroup Global Markets Inc. and Bank of America Merrill Lynch during the week.

The offering will be conducted in three tranches, and the authority intends to use the proceeds to refund existing debt and to make a deposit into its liquidity reserve fund.

Dasny, Citizens deals planned

Another major offering coming up is a $1.8 billion deal from the Dormitory Authority of the State of New York. The authority intends to price state personal income tax revenue bonds through Goldman Sachs & Co. on Tuesday.

Proceeds from the sale will be used to finance capital projects at the State University of New York, the City University of New York and SUNY Upstate Community College facilities and to refund certain maturities of the series 2000A-B Metropolitan Transportation Authority state service contract bonds and certain maturities of various personal income tax revenue bonds issued by Dasny and the Empire State Development Corp.

Also ahead during the week, the Citizens Property Insurance Corp. of Florida plans to sell $1.25 billion of series 2012A personal lines account/commercial lines account senior secured bonds through J.P. Morgan Securities LLC.

Proceeds will be used to meet the corporation's claim-paying needs for its personal and commercial lines.

Q1 state revenues up

In the broader market, first-quarter revenue from U.S. state tax collection is growing, according to data from the Nelson Rockefeller Institute of Government, said Kozlik.

"Data from 47 states showed that collections increased by 4.1% in 1Q 2012, compared to 1Q 2011, the ninth consecutive quarter of increases," Kozlik wrote Monday.

North Dakota, with 29%, and Illinois, with 24%, reported the largest growth, Kozlik said. Notable decreases took place in California, which saw its tax revenues drop by 3.6%, and New York, which saw its tax revenues drop by 1.8%.

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