Munis little changed amid light trading; Washington deal reduces debt service by $4 million

By Sheri Kasprzak

New York, Aug. 13 - Municipal yields were mostly flat as light supply and light trading action provided little to push the market along, said market insiders.

"It's not very busy today, so we're kind of hanging in there," said one trader reached during the afternoon.

"Supply is going to be rather light this week."

In fact, about $6 billion of new deals are expected. They will be led by a $777.18 million sale from Energy Northwest of Washington state. That deal is set to price through Bank of America Merrill Lynch, Citigroup Global Markets Inc. and Goldman Sachs & Co.

Proceeds will finance the acquisition of fuel for the Columbia Generating Station. The deal will price in two tranches.

According to Tom Kozlik, municipal credit analyst with Janney Montgomery Scott LLC, Energy Northwest provides electricity to about 1.5 million customers.

Also coming up, the State of California is gearing up to sell $10 billion of short-term notes on Thursday.

Washington saves $4 million

In other news, the State of Washington's recent $732.61 million sale of series R-2013 general obligation bonds reduced debt service by $4 million for the 2011-2013 period, said state treasurer James McIntire.

The offering included $352.22 million of series R-2013A various purpose G.O. bonds and $380.39 million of series R-2013B motor vehicle fuel tax G.O. bonds.

The R-2013A bonds are due 2013 and 2016 to 2030 with 3% to 5% coupons. The R-2013B bonds are due 2013 to 2030 with 3% to 5% coupons.

The bonds (/AA+/AA+) were sold competitively. Citigroup Global Markets Inc. won the bid for the R-2013A bonds with a 2.59% true interest cost. Bank of America Merrill Lynch won the bid for the R-2013B bonds with a 2.52% TIC.

"Reducing debt service by more than $4 million for the 2011-2013 biennium is a significant savings for Washington," McIntire said in a statement.

"By carefully monitoring our debt portfolio we were able to take advantage of the current low-interest environment and reap the rewards of the call provisions on outstanding bonds."

Proceeds will be used to refund existing G.O. debt.

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