Municipals end mostly flat as investors yawn at offerings; North Carolina brings $156 million

By Sheri Kasprzak

New York, Dec. 15 - Municipals were largely unchanged on Thursday as the market shifted gears from a heavy supply mode to a more holiday mindset, market insiders reported during the session.

Secondary, according to one market source, was very quiet, and the response to primary offerings was less than stellar.

"I don't think there's anything fundamentally wrong in the market, I just think that maybe investors are kind of moving into a holiday mode," he said.

"For a few weeks, issuers were shoving out as many deals as they could before the year ends, but it's gotten quiet all of the sudden."

There was a touch of firmness in the market, especially at the 10-year market. Ten-year yields were down about 3 basis points.

Indeed, the coming week's new issue calendar will be decidedly more subdued than that of recent weeks.

"Next week's new issue calendar is nearly blank, with only 19 issues listed so far totaling under $500 million, quite a contrast to 2010's yea-rend frenzy as borrowers rushed to beat the sunset of Build America bonds," said Alan Schankel, managing director with Janney Montgomery Scott LLC.

"In the week ending Dec. 7, municipal bond mutual funds added $1.46 billion of new assets, the biggest jump in more than two years."

North Carolina brings Garvees

Leading the day's lighter primary activity, the State of North Carolina offered $156 million of series 2011 grant anticipation revenue vehicle bonds, said a term sheet.

The bonds (Aa2/AA/AA-) were sold through senior manager Bank of America Merrill Lynch.

The bonds are due March 1, 2023. They have a split maturity with a 2% and a 4% coupon, both priced to yield 2.1%.

"The structure of the bonds is interest-only for the first seven years with the principal amortizing over the final five years of the life of the bonds," said Julia Vail, spokeswoman for the state treasurer's office.

Proceeds will be used to finance federal highway projects.

Collier deal ahead

Amid the light primary activity in the week ahead, Collier County of Florida is expected to price $94,705,000 of series 2011 general obligation refunding revenue bonds on Monday.

The bonds (/AA/AA) will be sold competitively and are due 2012 to 2029.

Proceeds from the sale will be used to finance the construction and equipment of a county jail, county development complex and other capital projects.

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