Yields hold steady as week's new deals trickle in; New York Local Government Assistance prices

By Sheri Kasprzak

New York, Aug. 31 - Municipals spent another day on the sidelines Wednesday as low supply kept investors out of the market, said traders.

With the exception of 15-year yields, the yield curve was largely unchanged. Fifteen-year yields were seen up more than 3 basis points, said one trader reached during the session.

Little primary activity has kept investors out of the game, but the approaching Labor Day weekend could also be keeping investors and issuers away.

"I think Labor Day is a real issue," said one trader.

"It gets slow around most holidays, but everyone's leaving for the weekend early."

Another trader noted that retail investors in particular, who have been turned off by too-low yields on the short end of the yield curve, are even less present in the market than they had been.

New York LGAC deal prices

Heading up Wednesday's primary calendar, New York Local Government Assistance Corp. offered up $184.04 million of series 2011A subordinate-lien refunding bonds, said a pricing sheet.

The bonds were sold competitively with Bank of America Merrill Lynch winning the bid. The true interest cost came in at 1.654503%.

The bonds are due 2012 to 2021 with 4% to 5% coupons.

Proceeds will be used to refund the corporation's series 2008B-BV2 bonds.

"Refunding the variable-rate bonds with fixed-rate bonds allows LGAC to take advantage of the low interest rate environment, demand for highly rated municipal debt and reduce its exposure to interest rate risk, liquidity renewal risk and support cost increases," said a statement released by New York comptroller Thomas DiNapoli's office.

Tampa brings bonds

One of the larger negotiated deals of the week priced Wednesday. The City of Tampa came to market with $121.05 million of series 2011 water and sewer systems improvement and refunding revenue bonds, said a pricing sheet.

The bonds (Aa1/AA+/AA+) were sold through Wells Fargo Securities LLC.

The bonds are due 2012 to 2031 with 2% to 5% coupons.

Proceeds will be used to prepay outstanding notes, refund the city's series 2001A water and sewer revenue bonds and fund various sewer capital improvements included in the city's five-year capital improvement program.

New Hanover sells debt

In other pricing news, New Hanover County, North Carolina, priced $93.965 million of series 2011 hospital revenue refunding bonds for the New Hanover Regional Medical Center, said a pricing sheet.

The bonds (A1/A+/) were sold through senior managers RBC Capital Markets LLC and Bank of America Merrill Lynch.

The bonds are due 2012 to 2025 with a term bond due in 2028. The serial coupons range from 3% to 5%. The 2028 bonds have a split maturity with a 4.625% coupon priced at 98.208 and a 5% coupon priced at 101.733.

Proceeds will be used to refund the medical center's series 1999 revenue bonds.

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