Yields seen flat to weaker; Irvine Ranch Water District, Calif., plans $420 million G.O. sale

By Sheri Kasprzak

New York, April 5 - Municipal yields were seen weaker in the short and intermediate maturities, said traders reached Monday as the market got back down to business after the Good Friday holiday.

"The long end is relatively flat," said one trader reached during the afternoon.

"Short, and probably out to about 20 years, yields are up by maybe 1 or 2 basis points. Trading volume has been pretty light."

Another trader said the short end was taking the brunt of the beating Monday.

"I'd say everything from one to five years is probably up 2 basis points," said the trader. "The rest is unchanged for the most part. Some spots might be up by 1 basis point or so."

Amid the trading action, the Massachusetts Department of Transportation's series 2010B contract assistance revenue bonds were seen moving. The 4% 2028 bonds were seen trading at 4.007%. The bonds priced on Thursday through Citigroup Global Markets Inc. The 4% 2028s priced at 97.147.

Irvine Ranch Water District deal ahead

On the primary side, the calendar was stacking up for the week ahead. Activity will be led by a $420 million sale of series 2010 taxable general obligation bonds from the Irvine Ranch Water District Joint Power Agency of California. The sale is scheduled for Thursday, said a sales calendar.

The bonds (Aaa) will be sold on a negotiated basis with Bank of America Merrill Lynch as the senior manager.

Proceeds from the sale will be used to partially refund the agency's taxable refunding bonds.

The agency, based in Irvine, Calif., provides domestic water service, sewage collection and water reclamation for the city.

Illinois to price $356 million

Coming up on Tuesday, the State of Illinois is scheduled to price $356 million in series 2010 taxable G.O. bonds, according to a sales calendar.

The bonds (A2//A-) will be sold competitively.

The offering includes $300 million in series 2010-2 Build America Bonds and $56 million in series of March 2010 taxable bonds.

Proceeds from the deal will be used to finance school district capital projects.

Philadelphia to bring bonds

Also ahead, the City of Philadelphia plans to bring to market $391.3 million in series 2010 water and wastewater revenue refinancing bonds on Thursday, according to a sales calendar.

The bonds (A3//A-) will be sold on a negotiated basis with Morgan Stanley & Co. Inc. as the senior manager.

The city plans to use the proceeds to refund its outstanding series 2003 variable-rate bonds as well as pay costs to Citigroup associated with terminating a swap agreement related to the refunding.

Rensselaer Polytechnic to sell

The week will include two offerings for Rensselaer Polytechnic Institute. The City of Troy, N.Y., where the institute is located, will sell $350 million in series 2010 capital resource corporation revenue bonds on Thursday. The institute itself is expected to price $200 million in series 2010 taxable bonds on Thursday.

The Troy bonds (A3/A/) will be sold through Morgan Stanley.

Proceeds from that sale will be used to refund the institute's outstanding series 2002B-D bonds, 2007 bonds and 2008 bonds.

The institute will sell its bonds (A3/A/) through J.P. Morgan Securities Inc., and those bonds are due Sept. 1, 2020.

The institute plans to use those proceeds to refinance bank loans.

Stanford to price $250 million

In other university offerings, the California Educational Facilities Authority is set to price $250 million in series 2010U-1 revenue bonds for Stanford University on Tuesday, said a sales calendar.

The bonds (Aaa//AAA) will be sold through lead manager Morgan Stanley.

Proceeds will finance a loan to the university for capital expenditures.

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