Munis close a bit weaker after Treasury sell-off; New York Environmental sells $193.56 million

By Sheri Kasprzak

New York, June 14 - Despite an off day for Treasuries following a sell-off, municipals were only a touch off, traders reported, a sign that indicates the market is actually rather healthy.

"We're off just a bit in places, especially short," said one trader.

"Compared to the beating Treasuries took, we're OK. It's probably a good sign because we typically follow Treasuries pretty close, but we're not that bad today."

Short bonds were off by about 2 basis points, the trader reported. The rest of the market held steady with spotty weakness.

The 10-year Treasury note was off by 11 bps, and the 30-year note was weaker by 10 bps.

In the broader municipals market, municipal bond fund inflows are finally seeing positive flows, according to Casy O'Brien and Kevin Thompson, managing directors with Morgan Keegan & Co. Inc.

They wrote in a report Tuesday that muni bond fund inflows totaled $274 million last week, the first positive flows in 29 weeks.

"Coupled with continued reinvestment through the remainder of June, July and now some discussions as to August reinvestment, the market could remain attractive for issues," they wrote.

"Tax-exempt money market funds experienced heavy inflows of $2.98 billion to reverse last week's heavy outflows."

The two also noted that about $6 billion of new issuance came to market last week and another $5 billion of new issues are expected for this week.

New York Environmental price

Heading up the day's primary action, the New York State Environmental Facilities Corp. brought $193.56 million of series 2011C state revolving fund revenue bonds, said a partial pricing sheet.

The bonds (Aaa/AAA/AAA) were sold through Bank of America Merrill Lynch and Siebert Brandford Shank & Co. LLC.

The bonds are due 2011 to 2031 with term bonds due 2034 and 2041. The serial coupons range from 2% to 5%. The 2034 bonds have a 4.25% coupon, and the 2041 bonds have a 5% coupon.

Proceeds will be used to fund eligible drinking and clean water projects within the state.

Lexington-Fayette prices deal

Moving to the competitive marketplace, the Lexington-Fayette Urban County Government Public Facilities Corp. of Kentucky sold Tuesday $138.635 million of series 2011A lease revenue bonds for the Eastern State Hospital, said a pricing sheet.

The bonds (Aa3/A+/AA-) are due 2014 to 2033 with coupons from 5% to 5.25%.

Proceeds will be used to repay notes issued to construct a new building at the Eastern State Hospital to treat the mentally ill.

Georgia preps large G.O. sale

A significant deal is planned for the coming week. The State of Georgia announced that it will bring $997.755 million of series 2011 general obligation bonds competitively on June 21.

The offering includes $39.105 million of series 2011A G.O. bonds, $28 million of series 2011B G.O. bonds, $412.51 million of series 2011C G.O. bonds, $77 million of series 2011D federally taxable qualified school construction G.O. bonds, $69.7 million of series 2011E-1 G.O. refunding bonds, $245.69 million of series 2011E-2 G.O. refunding bonds and $125.75 million of series 2011F G.O. refunding bonds.

The 2011A bonds are due 2012 to 2016, and the 2011B bonds are due 2012 to 2021. The 2011C bonds are due 2012 to 2031, and the 2011D bonds are due 2017 to 2027. The 2011E-1 bonds are due 2012 to 2020, and the 2011E-2 bonds are due 2012 to 2021. The 2011F bonds are due 2011 to 2020.

Proceeds will be used to construct, develop, improve, expand or enlarge land, water, property, buildings and other state facilities and to provide educational facilities for county and independent school systems within the state. The refunding bonds will be used to refund the state's series 2006H bonds.

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