Muni yields hold steady; Nashville and Davidson County, Tenn., to sell $575 million G.O. bonds

By Sheri Kasprzak

New York, May 28 - Municipal yields were largely unmoved in a slow Friday session ahead of the Memorial Day holiday. Market insiders blamed the sluggishness on the holiday weekend.

"It's slow, but it's almost always slow before a long weekend," said one trader.

"I'd call it unchanged. There might be a tiny bit of weakness out long, but mostly flat. It has been very, very quiet today."

Meanwhile, primary action in the shortened week ahead will be led by a $575 million sale of series 2010 general obligation bonds from the Metropolitan Government of Nashville and Davidson County in Tennessee. That sale comes to market on Thursday.

"I think it might not be the best time for them to come to market right now, to be honest with you," said one sellsider familiar with the sale on Friday.

"Their rating got knocked down just a month ago, so they're not as appealing as they might have been even a few months ago. I think they probably are heading out of the gate a little too late. It might come a little cheap. That would be my guess. I won't speculate where it will come, but it will be interesting to see."

Fitch rates the bonds A+. Until April, the government was rated AA-.

The offering includes $275 million in series 2010A G.O. improvement and refunding bonds, $250 million in series 2010B Build America Bonds and $50 million in series 2010C taxable G.O. refunding bonds.

The bonds will be sold through lead manager Goldman, Sachs & Co.

The 2010A bonds are due 2015 to 2025, and the 2010B bonds are due July 1, 2034. The 2010C bonds are due 2013 to 2015.

Proceeds will be used to retire the government's series 2010A and 2010B commercial paper, which provided short-term financing to construct, acquire, equip and renovate capital projects.

Stanford Hospital to price

Also during the coming week, the California Health Facilities Financing Authority is set to price $315.38 million in series 2010 refunding revenue bonds for Stanford Hospital and Clinics. The sale is planned for Thursday, according to a sales calendar.

The bonds (Aa3/A+/AA-) will be sold on a negotiated basis with Morgan Stanley & Co. Inc.

Proceeds will be used to refund the hospital's series 1998B and 2003B-D bonds, which were used to construct, equip and renovate Stanford Hospital and Clinics facilities.

The authority, based in Sacramento, provides financing for hospitals and health-care centers throughout the state. Stanford Hospitals and Clinics is based in Stanford and operates health-care facilities.

San Diego plans sale

Coming up on Tuesday, the County of San Diego and San Diego County School Districts in California are expected to price $264.745 million in series 2010 tax and revenue anticipation notes, according to a calendar of upcoming sales.

The offering includes $140 million in series 2010A bonds, $22.84 million in series 2010B-1 bonds and $101.905 million in series 2010B-2 bonds.

The notes (/SP-1+/) will be sold through RBC Capital Markets Corp. and De La Rosa & Co.

The 2010A notes are due June 30, 2011. The 2010B-1 notes are due Jan. 31, 2011, and the 2010B-2 notes are due April 29, 2011.

Proceeds will be used to finance capital projects ahead of the collection of taxes and revenues.

LSU to price

In other sales, the Board of Supervisors of Louisiana State University and Agricultural and Mechanical College is set to price $121.61 million in series 2010 auxiliary revenue and revenue refunding bonds, said a preliminary official statement.

The offering includes $89.485 million in series 2010A auxiliary revenue and refunding bonds and $32.125 million in series 2010B Gulf Opportunity Zone auxiliary revenue bonds.

The 2010A bonds are due 2010 to 2023 with term bonds due 2025, 2030, 2035 and 2040. The 2010B bonds are due 2012 to 2023 with term bonds due 2025, 2030, 2035 and 2040.

The bonds (A1/AA-/) will be sold on a negotiated basis with Morgan Keegan & Co. Inc. as the lead manager.

Proceeds will be used to refund the board's series 2002 variable-rate bonds and to construct, renovate, demolish and upgrade a variety of buildings at the university's Laville Honors College.

The university is based in Baton Rouge.

Illinois plans deal

Also coming up, the State of Illinois is set to price $492 million in series of June 2010 junior obligation sales tax revenue bonds on June 16, said a preliminary official statement.

The bonds (//AA+) will be sold on a negotiated basis with Cabrera Capital Markets LLC as the lead manager.

Proceeds will be used to construct, reconstruct, modernize and extend various state infrastructure projects; develop and improve educational, scientific, technical and vocational programs and facilities as well as expand health and human services; protect, preserve, restore and conserve the state's natural resources; and provide incentives for the expansion of businesses into the state.

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