Municipal yields flatten to end week; Bay Area Toll Authority, Puerto Rico prep offerings

By Sheri Kasprzak

New York, June 18 - Municipals ended the week flat after struggling early in the week, market insiders reported. Meanwhile, a new crop of issues stacked up on the negotiated calendar, including major deals from the Bay Area Toll Authority in California and the Puerto Rico Sales Tax Financing Corp.

"It's a tough market, but it's also a situation where some issuers are looking at what they need for the fiscal year," said one sellside source. "I think a lot of issuers are going to have to take a really hard look at how little they can get by with."

In secondary market activity, trading remained light and yields were flat. The earlier part of the week saw yields up by as much as 5 basis points.

"It is truly dead around here," noted the trader. "Yields aren't moving very much."

Looking to the coming week's activity, the Bay Area Toll Authority of California is set to bring to market $1.7 billion in series 2010 subordinate toll bridge revenue bonds Thursday, according to a calendar of upcoming deals.

The bonds (A1/A+/) will be sold on a negotiated basis with Bank of America Merrill Lynch and Citigroup Global Markets Inc. as the lead managers.

Proceeds will be used to fund the construction of a new east span of the San Francisco-Oakland Bay Bridge.

The San Francisco-based authority operates the Bay Area's toll bridges and roads.

Puerto Rico deal ahead

Also coming up in the week, Puerto Rico Sales Tax Financing plans to price its previously announced $1.572 billion in series 2010 revenue bonds on Tuesday, according to a sales calendar.

The offering includes $1.4 billion in series 2010C sales tax first subordinate revenue bonds, $80 million in series 2010D sales tax subordinate Build America Bonds and $92 million in series 2010E sales tax first subordinate recovery zone economic development bonds.

The lead managers for the 2010C bonds are Citigroup, Bank of America Merrill Lynch, J.P. Morgan Securities Inc. and Wells Fargo Securities Inc.

The senior managers for the 2010D and 2010E bonds are Santander Securities Inc., Popular Securities and UBS Financial Services Inc. of Puerto Rico.

Proceeds will be used to redeem existing refunded bonds and repay outstanding obligations.

Oregon eyes bond sale

In other upcoming deals, the State of Oregon plans to sell $838.1 million in series 2010A full faith and credit tax anticipation notes on Thursday, according to a preliminary official statement.

The notes (MIG1/SP-1+/F1+) will be sold on a negotiated basis with Citigroup and Bank of America Merrill Lynch as the senior managers.

The notes are due June 30, 2011.

Proceeds will be used to meet the state's seasonal cash flow needs.

University of Texas bonds planned

On Wednesday, the Board of Regents of the University of Texas System is set to sell $520 million in series 2010D revenue financing system taxable bonds, according to a sales calendar.

The bonds (Aaa/AAA/AAA) will be sold through Morgan Stanley & Co. Inc. and Barclays Capital Inc.

Proceeds will refund a portion of the university's tax-exempt commercial paper notes, as well as finance campus improvements.

New York water bonds on tap

Elsewhere, the New York City Municipal Water Finance Authority plans to sell $400 million in fiscal 2010 series GG water and sewer second general resolution revenue bonds on Tuesday, according to a preliminary official statement.

The bonds (Aa2/AA+/AA+) will be sold through lead manager Morgan Keegan & Co. Inc.

Proceeds will be used to redeem existing commercial paper notes and to finance improvements to the city's water and sewer system.

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