Municipals close mostly flat; New Jersey Transportation Trust Fund prices $1.25 billion bonds

By Sheri Kasprzak

New York, Dec. 4 - Municipals were unchanged overall, market sources said Tuesday, as primary activity took the center stage.

"There's a lot going on in primary this week, and it's likely that this will be maybe the last chance many investors have until the beginning of next year," said one trader.

"Primary is really the focus, and that should be the case throughout the week. There's some stuff trading, but the bid side is really kind of lagging."

As issuers prepare their last offerings of 2012, investors are still hungry for more, said one market source.

"Demand is still strong, but supply is going to drop off around the last two weeks of December," he said.

Transportation bonds price

Heading up the day's pricing action, the week's largest deal came to market. The New Jersey Transportation Trust Fund Authority sold $1,247,000,000 of series 2012 transportation system bonds, according to a pricing sheet.

The deal included $326,255,000 of series 2012A transportation system bonds and $290,745,000 of series 2012AA transportation program bonds.

The 2012A bonds are due June 15, 2042 and have a 5% coupon priced at 115.279.

The 2012AA bonds are due 2014 to 2033 with a 2038 term bond. The serial coupons range from 2% to 5%. The 2038 bonds have a split maturity with a 3.25% coupon priced at 98.5 and a 5% coupon priced at 115.814.

The bonds (A1/A+/A+) were sold through Barclays.

Proceeds will be used to fund fiscal 2013 transportation projects.

Delaware port deal planned

Looking to upcoming sales, the Delaware River Port Authority, a bi-state agency for Pennsylvania and New Jersey, intends to hit the market with $180 million of revenue bonds in the coming weeks, said Alan Schankel, managing director with Janney Montgomery Scott LLC.

"S&P revised its outlook on Delaware River Port Authority to positive from stable," Schankel said Tuesday.

"DRPA has about $1 billion revenue bonds outstanding and $230 million port district project bonds. DRPA plans to refinance most outstanding PDP debt, which is subordinate to the revenue bonds, with a $180 million issue in coming weeks.

"Debt service coverage on the revs was about 2.07x in 2011 versus 1.27x for the PDP bonds.

"Although traffic on the four DRPA bridges has declined somewhat in recent years, toll increases have generated enough revenue to strengthen financial operations. In the first nine months of 2012, traffic decline 1.4% versus 2011, but revenues rose 13.6%, largely due to a July 2011 toll bump."

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