Munis still quiet ahead of holiday weekend; market braces for multibillion week of sales ahead

By Aaron Hochman-Zimmerman and Sheri Kasprzak

New York, July 1 - Even though the rest of the week may be a wash, municipal market insiders said the coming week will provide more than enough action to keep investors on their toes.

"We're really quiet today," one trader noted. "Looks that way the rest of the week. Well, tomorrow's a short day and then nothing on Friday."

A sellside source told Prospect News that the week ahead will provide billions for investors to sink their teeth into.

"Next week is just exploding," he said. "Lots of issuers were purposefully avoiding this week because it's a short week, so everything's getting done next week."

The market was just "gliding into the three-day weekend," said trader Anthony Shields, senior vice president with Grigsby & Associates.

The Lambert-St. Louis International Airport revenue and refunding bonds were improved by a few points, although the action was light and noticeably so for California.

"It's stunning to me that the bids dried up," Shields said.

"I sold bonds in [2016s] at plus-190 and now they don't have a bid better than 300 [basis points over MMD]," he said.

The debacle in Sacramento is also "contaminating other, stronger Cal names," he said.

Pasadena, one of the "premier names" in the state, was "having trouble" in the secondary, he said.

Orange County brings bonds

Among the primary action from Wednesday was Orange County, Calif., which sold $233.115 million in series 2009 airport revenue bonds, said Courtney Wiercioch, spokeswoman for the county's airport.

The bonds (Aa3/AA-/AA-) are due July 1, 2039 and priced with a true interest cost of 5.147356%.

Citigroup Global Markets Inc. and Morgan Stanley & Co. Inc. were the senior managers.

Proceeds will fund improvements to John Wayne Airport, including the construction of a new terminal and a new parking structure.

The county seat is Santa Ana, Calif.

Despite troubles in the Golden State, the revenue bonds "did well," according to a trader, but general obligation bonds and school district bonds in the state will likely face deepening troubles.

Meanwhile, Gov. Arnold Schwarzenegger declared a state of economic emergency in order to force the legislature back into session to solve the $26.3 billion deficit puzzle.

Inaction over a still-growing deficit is "inexcusable," Schwarzenegger said, according the Los Angeles Times.

Aqua America bonds price

In other primary activity, the Pennsylvania Economic Development Authority sold $58 million in tax-exempt first mortgage bonds for Aqua America Inc. (/AA-/) with a coupon of 5% to yield 5.23%. The bonds were sold on behalf of subsidiary Aqua Pennsylvania Inc., according to a press release.

Jefferies & Co., Janney Montgomery Scott LLC, Boenning & Scattergood, Inc. and Edward D. Jones & Co. LP acted as underwriters for the negotiated bonds, which mature in 2039.

The bonds are callable in 2019.

"The strong S&P credit rating allows the company to continue to access the capital markets at reasonable rates and enables Aqua to contribute to the reduction of the overall embedded cost of debt for Aqua America companies, which is now at 5.6%," chief executive officer Nicholas DeBenedictis said in a statement.

"This has allowed us to maintain our business model and to finance infrastructure projects that will improve water quality and reliability, and benefit the local economy," he said.

Aqua America is located in Bryn Mawr, Pa.

L.A. to sell $1.04 billion

Looking to next week's billion-dollar calendar, the City of Los Angeles plans to bring to market $1.039 billion in series 2009 tax and revenue anticipation notes (MIG 1/SP-1+/F1+) July 9.

Goldman, Sachs & Co. is the senior manager for the notes, which are due June 30, 2010.

Proceeds will be used to provide effective cash-flow management for revenue and expenditures.

Two other major sales come out of the Empire State.

The New York State Thruway Authority plans to price $700 million in series 2009A general revenue bond anticipation notes (MIG 1/SP-1+/) on July 8.

The notes are due July 14, 2011 and will be sold through Citigroup and M.R. Beal & Co.

Proceeds will be used to fund the authority's multiyear plan and make a deposit to a maintenance service fund.

Metropolitan Transportation Authority of New York is expected to price $600 million in series 2009 revenue anticipation notes (//F1+) during the week.

Barclays Capital Inc. is the senior manager.

The notes are due Dec. 31, 2009.

Proceeds will be used to fund short-term operation and maintenance expenses.

Cal Infrastructure bonds

The California Infrastructure and Economic Development Bank will sell $210 million in series 2009A revenue bonds (A2/A/AA-) July 8, according to a calendar of upcoming sales.

The bonds will carry serial maturities from 2012 to 2024 with term bonds in 2034 and 2039.

RBC Capital Markets Corp. will act as lead underwriter for the negotiated deal.

The California Infrastructure and Economic Development Bank is located in Sacramento.

Rush to move $200 million

The Illinois Finance Authority plans to price $200 million in series 2009 revenue bonds for Rush University Medical Center July 9, according to a calendar of upcoming sales.

The bonds (A3/A-/A-) will be sold on a negotiated basis with Morgan Stanley as lead underwriter.

Proceeds from the sale will be used to construct new facilities and renovate existing facilities at the medical center, which is located in Chicago.

Jersey Trans to roll out bonds

The South Jersey Transportation Authority plans to offer $165 million in series 2009 Build America Bonds and subordinated transportation system revenue bonds (A3/A-/BBB+), according to a calendar of upcoming sales.

Merrill Lynch & Co. will act as underwriter for the negotiated deal scheduled for July 9.

The South Jersey Transportation Authority is located in Hammonton, N.J.

Arizona water to sell

Water Infrastructure Finance Authority in Arizona will offer $147.615 million series 2009A water quality revenue and revenue refunding bonds (Aaa/AAA/AAA) Tuesday, according to a calendar of upcoming sales.

Morgan Stanley will act as underwriter for the negotiated deal.

A retail offer period will be held Monday.

The Water Infrastructure Finance Authority is located in Phoenix.

Dasny plans U of Rochester bonds

Also coming up, the Dormitory Authority of the State of New York plans to sell its previously announced $136.776 million in series 2009 revenue bonds for the University of Rochester July 8, said a calendar of upcoming sales.

The sale includes $72.691 million in series 2009A bonds, $35.28 million in series 2009B bonds, $10.685 million in series 2009C bonds, $3.61 million in series 2009D bonds and $14.51 million in series 2009E bonds.

The bonds (Aa3/A+/) will be sold through lead manager Barclays Capital.

Proceeds will be used to construct improvements to the university and refund the university's series 1997A, 1998A and 2000A bonds.

Minnesota power offers $95.6 million

Southern Minnesota Public Power will sell $95.6 million in revenue bonds July 8, according to a calendar of upcoming sales.

Morgan Stanley will act as underwriter for the negotiated deal. A retail order period will be held Tuesday.

The bonds are due 2010 to 2020 with term bonds due 2024 and 2030, and proceeds will refund the agency's series 1998A revenue bonds as well as the agency's commercial paper notes.

Southern Minnesota Public Power is located in Rochester, Minn.

North Carolina Turnpike deal

Looking ahead a bit, the North Carolina Turnpike Authority plans to bring to market $273.882 million in series 2009 Triangle Expressway System senior lien revenue bonds, said a preliminary official statement. Pricing is expected for the week of July 13, confirmed a sellside source who saw the offering.

The bonds (Aa2/AAA/AA) will be sold on a negotiated basis with Merrill Lynch and Banc of America Securities LLC as the senior managers.

The sale includes $191.58 million series 2009A bonds and $82.302 million in series 2009B bonds.

The 2009A bonds are due 2019 to 2024 with term bonds due 2029 and 2039. The maturities for the 2009B bonds have not yet been set.

Proceeds will be used to fund engineering costs, develop rights-of-way and roadways in the Triangle Expressway System and pay for maintenance costs.

Miami-Dade ups max TIC

In other municipals news, the Miami-Dade County's board of commissioners voted Tuesday to increase the maximum TIC on its planned $130 million sale of series 2009 special obligation bonds, said a resolution released to Prospect News Wednesday.

The bonds (A3/A+/A) had been scheduled to price on Tuesday.

The maximum TIC will now be 8.2% for the tax-exempt bonds, up from 7.5%.

The size of the sale was also increased, from $100 million to a maximum of $130 million.

J.P. Morgan Securities Inc. is the senior manager.

No new pricing date has been set.

Proceeds will be used to construct a baseball stadium for the Florida Marlins baseball team.

Secondary remains firm

Moving to the secondary market, traders said the tone firmed yet again with light trading activity. Yields on the longer end of the yield curve, one trader reporter, may have improved by 1 to 2 bps.

Among Wednesday's trades was the Memphis-Shelby County, Tenn., series 2009A arena project bonds. The 5.25% 2027 bonds were seen at 5.39%. The series 2009B arena project bonds were also in motion. The 5.35% 2029 bonds were seen at 1.5%.

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