Munis stabilize somewhat, slip on long end; Los Angeles County brings $1.1 billion of TRANs

By Sheri Kasprzak

New York, June 7 - Municipals were slightly off on Thursday, but the market showed signs of stabilization, traders reported.

"New issues seem to be pricing well, but there's still enough pressure keeping the tone soft," said one trader reached during the afternoon.

"After yesterday's correction, everything is pretty much realigning today. I'd say the long end is softer, but everything else seems fairly stable."

Wednesday was a tough day for the market, insiders reported. On Thursday, Tom Kozlik, municipal credit analyst with Janney Montgomery Scott LLC, said that yields in the 2016 to 2017 maturities were 2 basis points higher and the 2018 maturity was up by 4 bps. On the long end, between 2019 and 2042, maturities were all higher by 7 bps, Kozlik said.

L.A. County TRANs price

Heading up the day's pricing action, Los Angeles County, Calif., sold $1.1 billion of series 2012-13 tax and revenue anticipation notes, said a pricing sheet.

The notes (MIG 1/SP-1+/F1+) were sold through Wells Fargo Securities LLC.

The offering included $300 million of series 2012A notes, $400 million of series 2012B notes and $400 million of series 2012C notes.

Proceeds will be used to help the county meet general capital requirements for the fiscal year 2012-13 ahead of the collection of taxes and revenues.

Suffolk comes amid shortfalls

In other news, Suffolk County, N.Y.'s $60.09 million sale of public improvement bonds conducted Wednesday comes as the county faces a fiscal emergency, said Kozlik.

"Suffolk has reported budget shortfalls every year since 2008, is projecting continued shortfalls and is in the midst of a fiscal emergency declared in March," Kozlik wrote.

"Moody's downgraded the county to A1 from Aa2 with negative outlook based on sharply narrowed liquidity after recurring operating deficits have significantly reduced reserve levels. The county continues to face a structural operating gap in the current fiscal year, necessitating significant midyear budget adjustments."

Kozlik also noted that Standard & Poor's and Fitch Ratings have also downgraded the county's ratings.

The bonds the county priced Wednesday have a 2.98% yield and a 3% coupon in the 2022 maturity, Kozlik said.

The bonds (A1/A+/A+) are due 2013 to 2026 with 3% to 4% coupons.

"Suffolk is unique in that economically sensitive sales and usage taxes account for almost 45% of its revenue, and those revenues fell sharply as a result of the recent recession," Kozlik said.

Proceeds will be used to finance street, water system, sidewalks and park facilities improvements.

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