Minnesota sells $658.5 million of G.O. bonds in thin primary; short munis active in trading

By Cristal Cody

Tupelo, Miss., Aug. 7 - Most of the week's municipal pricing action took place on Tuesday, and other deals on the calendar are expected to attract only specialized interest, sources said.

The State of Minnesota brought $658.5 million of series 2012 general obligation state bonds via competitive sale on Tuesday, a source close to the sale said.

The State of Washington sold its offering of $703.27 million of G.O. refunding bonds, and the New York City Transitional Finance Authority priced $1.65 billion of future tax secured bonds on Tuesday, according to bond sources. Pricing terms were not available by press time.

Supply for the rest of the week appears thin with one $270.96 million G.O. refunding bond offering from Mississippi, sources said. Other deals include the New Jersey Economic Development Authority's $734 million bond sale for Continental Airlines Inc., which is expected to attract interest from high-yield funds.

"The Chicago O'Hare and the New Jersey airport deals are all kind of specialized and higher-yield stuff that will appeal to only a certain group," one source said.

Additional details emerged on Tuesday for the State of California's upcoming $10 billion offering of revenue anticipation notes, which will price on Aug. 16.

The deal calendar for next week is filling in. Among those deals is a $208.76 million three-tranche offering of infrastructure refunding bonds (Aaa/AAA/AAA) from the New Jersey Environmental Infrastructure Trust.

Secondary activity picked up in the muni market on Tuesday, a trader said.

"My secondary has been very, very active today," the trader said. "A lot of short stuff is trading, and a lot of 10-year stuff is trading. One- to two-year and 10-year [notes] seems to be where the value is right now."

Municipals overall tracked government bonds and ended about half of a basis point down on the day, a trader said.

"Pretty weak," the trader said. "A couple things are holding it up - the August reinvestment and the lack of supply. If we didn't have those things, we'd be down a lot further than we are."

Minnesota sells $658.5 million

Minnesota raised $658.5 million in three tranches of series 2012 G.O. state bonds through offerings sold competitively on Tuesday, a source close to the sale said.

J.P. Morgan Securities LLC was the winning bidder for $422 million of series 2012A state various purpose G.O. bonds due 2013 to 2032. The true interest cost was 2.052118%.

Wells Fargo Securities LLC placed the winning bid for the $234 million of series 2012B state trunk highway G.O. bonds due 2013 to 2032. The TIC was 2.380007%.

Piper Jaffray & Co. was the winning bidder for $2.5 million of series 2012C taxable state G.O. bonds due Aug. 1, 2017. The TIC was 1.025817%.

Additional pricing terms were not immediately available.

Public Resources Advisory Group LLC was the financial adviser.

Proceeds will be used to finance all or a portion of the cost of certain programs and capital projects, including educational facilities, parks, pollution control facilities, transportation, natural resources and agricultural enterprises, as well as the construction, improvement and maintenance of state trunk highway system projects and agricultural projects of the Rural Finance Authority.

California details sale

Additional details emerged on Tuesday for the State of California's upcoming $10 billion offering of series 2012-2013 revenue anticipation notes.

The deal will include series A1 notes due May 30, 2013 and series A2 notes due June 20, 2013.

The state intends to price the notes (MIG 1/SP-1+/F1) through a negotiated sale on Aug. 16, according to the California treasurer's office.

JPMorgan, Wells Fargo and De La Rosa & Co. are the senior managers.

Proceeds will be used to assist in cash management for the state's fiscal 2012-2013 fiscal year.

Chicago Board of Education plans $500 million offering

In other expected deals, the Board of Education of the City of Chicago will tap the market in a $500 million offering of G.O. bonds, according to a preliminary official statement.

The series 2012A bonds (A1/A+/A+) will have serial maturities and a term bond due 2042.

Goldman Sachs & Co. and Loop Capital Markets LLC are the bookrunners. The co-managers are Bank of America Merrill Lynch, BMO Capital Markets Corp., Cabrera Capital Markets, LLC, Lebenthal & Co., LLC, Ramirez & Co., Inc. and Raymond James/Morgan Keegan.

Proceeds will be used to fund the board's capital improvement program.

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