Munis steady as Milwaukee brings two deals to the table; activity light ahead of Memorial Day

By Sheri Kasprzak

New York, May 26 - Municipals were again unchanged amid light action ahead of the three-day weekend, said market sources.

"Not much is getting done in the municipal market as the holiday weekend fast approaches," said Alan Schankel, managing director with Janney Montgomery Scott LLC.

"Yields have changed little this week. The calendar for next week appears to be light at this point but is building with the recent addition for $510 million [from] New York State Environmental Facilities Authority (Aa1/AA+/AA+)."

According to Schankel, municipal mutual fund flows were $63 million to the positive side in the week ended May 18, the second positive week in a row.

"There's not a lot of movement," said one trader reached during the session.

Milwaukee prices two deals

Heading up light primary activity, the City of Milwaukee came to market with two offerings Thursday: $256.445 million of series 2011 general obligation notes and bonds and $52.565 million of series 2011-S1 sewerage system revenue bonds, said Michael Daun, the city's deputy comptroller, in an interview.

The $256.445 million deal included $100 million of series 2011-R2 G.O. cash flow promissory notes, $93.625 million of series 2011-N3 G.O. promissory notes, $28.89 million of series 2011-B4 G.O. corporate purpose bonds and $33.93 million of series 2011-T5 taxable G.O. corporate purpose bonds.

The bonds and notes were sold competitively. Wells Fargo Securities LLC won the series 2011-B4 bonds. Bank of America Merrill Lynch won the series 2011-R2 and 2011-N3 notes, and R.W. Baird & Co. won the series 2011-T5 bonds.

Daun said Thursday that the city had intended to conduct the offering a couple of months ago, but given the state's budget issues, the deal was put off.

"We needed a little bit of time for those things to settle down and for there to be a little definition about the state's financial situation," Daun said.

"We had the opportunity to meet with the rating agencies, and once we met with the rating agencies, we sold this debt. It wasn't necessarily market timing, more like giving us some extra time."

Proceeds will be used to fund the city's operating budget on an interim basis in anticipation of shared revenue payments as well as to finance various capital improvements and fiscal requirements.

Milwaukee sells sewerage bonds

The city's $52.565 million of series 2011-S1 sewerage bonds (Aa2//AA) were sold through Cabrera Capital Markets LLC, said a pricing sheet.

The bonds are due 2013 to 2031 with 3% to 5% coupons.

Richard Li, the city's public debt specialist, said the concurrent offering of sewerage bonds was conducted on a negotiated basis because of the refunding component of the deal.

"At the same time, we sold about $52 million of sewer bonds on a negotiated basis because of the complexity of the revenue bond issue," Li said.

"The substantial refunding portion justified doing a negotiated sale."

Proceeds will be used to finance capital improvements to the city's sewerage system.

Santee Cooper preps bonds

Looking ahead, the South Carolina Public Service Authority, or Santee Cooper, is set to price $336 million of series 2011A taxable Libor index revenue obligations, said a preliminary official statement.

The obligations will be sold through Goldman Sachs & Co.

The offering includes $168 million of bonds due July 1, 2013 and $168 million due on June 2, 2014.

Proceeds will be used to retire outstanding commercial paper notes.

Based in Moncks Corner, S.C., the authority produces and transmits electricity.

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