Municipal yields round out slow session flat; King County brings $69.46 million of G.O. bonds

By Sheri Kasprzak

New York, Sept. 17 - Municipal yield were largely unmoved ahead of the much-larger slate of new offerings slated to hit the market this week, traders and other market sources reported.

"There's not much to push the market right now. Secondary is quiet. We're waiting to see how retail order periods shake out," said a trader reached in the afternoon.

"We'll have a better idea of the direction tomorrow, I would think. It's hard to tell if the sudden supply will be a good thing or not. We could run into some supply pressure, but demand has remained strong, even throughout the supply drought."

About $8.6 billion of new offerings will hit the market this week after about four weeks of new-issue volume of less than $4 billion, said Tom Kozlik, municipal credit analyst with Janney Montgomery Scott LLC.

"Leading this week's issuance is a $1 billion New York City MTA [Metropolitan Transportation Authority] (A2/A/A) issue and a $716 million Bay Area Toll Authority, Calif., (Aa3/AA/AA-) sale," Kozlik said Monday.

King County offers G.O. bonds

Heading up the light primary action, King County, Wash., came to market with $69.46 million of series 2012 public transportation sales tax limited tax general obligation refunding bonds on Monday, said a term sheet.

The bonds (Aa1/AAA/AA+) were sold competitively with Citigroup Global Markets Inc., said Nigel Lewis, debt manager for the county.

"The TIC of their winning bid is 2.59%, and the present value of the debt service savings that will result is $12.5 million," Lewis said in an interview.

The bonds are due 2012 to 2031 with a term bond due in 2034. The serial coupons range from 2% to 5%. The 2034 bonds have a 3.6% coupon and priced at 100.808.

Proceeds will be used to refund the county's series 2002 and 2004 G.O. bonds.

In July, the county sold $94.61 million of G.O. refunding bonds at a 1.66% true interest cost from J.P. Morgan Securities LLC, saving the county $14.9 million on a present value basis.

Connecticut leads Tuesday

Moving to Tuesday's primary action, the State of Connecticut plans to bring $569.99 million of series 2012 G.O. bonds (Aa3/AA/AA) through Siebert Brandford Shank & Co. LLC.

Proceeds from that deal will be used to finance state expenditures and refund existing state G.O. debt.

S&P: Minnesota outlook stable

In ratings news, Standard & Poor's cut its rating on the State of Minnesota last year, but the news isn't necessarily so bleak, said Kozlik.

"Although S&P downgraded the State of Minnesota (Aa1/AA+/AA+) last year, the rating agency recently noted that the state has maintained a solid track record by making timely budget adjustments as needed," Kozlik wrote.

"S&P reinforced the state's stable outlook by noting 'the stable outlook on Minnesota reflects what we view as the state's track record of proactive budget management and relatively stable economic performance.'"

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