Munis quiet after strong week of bond deals; Maryland postpones sale for Moody's disclosure

By Cristal Cody

Prospect News, July 22 - Municipal yields ended unchanged on Friday after $9 billion in new issuance over the week.

"The calendar for next week is much lower, around $5 billion," an informed bond source said.

A couple of issuers announced upcoming deals, including Florida's Alachua County Health Facilities Authority and the Erie County Fiscal Stability Authority in New York.

"There is some uncertainty about the impact of the debt negotiations that is overhanging munis," the bond source said. "One deal had to be postponed for a little bit because Moody's put them on watch for downgrade due to their dependence on federal funds."

Maryland has a $100 million offering of general obligation bonds (Aaa/AAA/AAA) originally expected to price on Monday, though the deal still is expected to sell sometime in the week.

Moody's Investors Service announced on Tuesday that it put five Aaa-rated states- Maryland, Tennessee, New Mexico, South Carolina and Virginia - under review for possible downgrade due to their dependence upon federal revenues.

"Maryland is the only one that had a sale in the market," the source said. "I don't think it will impact yields, but they did have to postpone to issue the disclosure about the Moody's action."

About 8% of the market value of bonds in broad benchmark municipal bond index are backed by U.S. government bonds, J.R. Rieger, vice president of fixed income indexes at Standard & Poor's, said in a research note released on Friday.

Muni yields in that segment could rise if a debt resolution is not reached soon, he said.

"The uncertainty hasn't yet impacted those bonds as yields in the S&P/Investortools Municipal Prerefunded/ETM Index have come down by 6 basis points since June month end," he said. "That index has seen a positive month so far and a year to date return of 2.28%."

Alachua plans $145.27 million

Looking ahead, Alachua County Health Facilities Authority in Florida plans to sell $145.27 million of health facilities revenue bonds for the Terraces at Bonita Springs project, according to a preliminary official statement.

The sale includes $81.27 million of series 2011A fixed-rate bonds; $3 million of series 2011B accelerated-redemption reset-option securities; $15 million of series 2011C1 mandatory paydown securities and $46 million of series 2011C2 mandatory paydown securities.

Ziegler is the manager of the negotiated sale.

Proceeds will be used for the construction, development, acquisition of land and equipping of a continuing care retirement community in Bonita Springs, Fla.

Erie County unveils sale

Also coming up, the Erie County Fiscal Stability Authority in New York intends to bring $131.745 million in three tranches of bonds (Aa1//AA+), according to a preliminary official statement.

The sale includes $28.775 million of series 2011A, $16.62 million of series 2011B and $86.35 million of series 2011C sales tax and state aid secured bonds.

The series 2011A bonds have serial maturities from 2011 through 2018; the series 2011B bonds are due 2012 through 2023 and the series 2011C bonds have serial maturities from 2013 through 2028.

The bonds will price as a negotiated sale managed by lead underwriter Roosevelt & Cross Inc. and co-manager Jefferies & Co.

Proceeds will be used to refund a portion of the county's outstanding 2004B bonds, purchase county bonds and to make loans to provide for the payment of costs for county-approved capital commitments to the Erie County Medical Center Corp.

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