Munis rally along with Treasuries as stocks dive; Georgia brings $400.83 million of G.O. bonds

By Sheri Kasprzak

New York, Nov. 1 - Municipals closed out the session on a firmer note, with yields improving by 2 to 7 basis points, said market insiders. Yields responded favorably Tuesday to news that a planned referendum in Greece could threaten Europe's bailout plan for the troubled country.

Thirty-year yields were the most improved, seen down by more than 7 bps. Five-year yields were down by almost 4 bps, and 10-year yields were down more than 3 bps.

Meanwhile, a new slate of offerings hit the market Tuesday, most of them pricing competitively.

"I think it has a lot less to do with market conditions and more to do with the kinds of bonds pricing," said one trader when asked about the recent flood of competitive deals.

"Typically, issuers who want to go [competitively] choose to do so for relatively uncomplicated deals. There seems to be a lot of plain vanilla stuff out there."

Georgia sells $400.83 million

Heading up the day's primary action, the State of Georgia brought $400.825 million of series 2011 general obligation bonds, said a pricing sheet.

The bonds (Aaa/AAA/AAA) were sold competitively, but the issuer did not return calls requesting the winning bidder by press time Tuesday.

The offering included $38.8 million of series 2011H G.O. bonds, $208.2 million of series 2011I G.O. bonds, $64.66 million of series 2011J-1 G.O. refunding bonds and $89.165 million of series 2011J-2 G.O. refunding bonds.

The 2011H bonds are due 2012 to 2016 with 0.75% to 5% coupons. The 2011I bonds are due 2012 to 2031 with 2% to 5% coupons. The full pricing details for the 2011H and 2011I bonds were unavailable Tuesday.

The 2011J-1 bonds are due 2017 and 2021 to 2023 with 4% to 5% coupons. The 2011J-2 bonds are due 2017 to 2020 with a term bond due in 2022. The serial coupons range from 4% to 4.5%.

Proceeds will be used to acquire, construct, develop, extend, enlarge or improve land, waters, property, highways, buildings, structures, equipment or facilities within the state, for educational facilities for county and independent school systems, public libraries, counties, municipalities and library boards, as well as to refund existing debt.

Washington Suburban sells

In other competitive offerings, the Washington Suburban Sanitary District priced $300 million of series 2011 consolidated improvement bonds (Aaa), said a pricing sheet.

Bank of America Merrill Lynch won the bid, said John White, spokesman for the district. The true interest cost came in at 2.981%.

White said in an interview Tuesday that there were six bidders for the offering.

"As a practice, we always sell competitively," White noted.

The bonds are due 2012 to 2031 with 4% to 5% coupons.

Proceeds will be used to construct and reconstruct water supply lines, water supply facilities, transmission mains, sewage disposal facilities, large collection mains and water/sewer pipes for subdivisions.

Arkansas Development prices

Another competitive offering came to market Tuesday. The Arkansas Development Finance Authority offered $57.03 million of series 2011C capital improvement revolving loan fund revenue bonds, said a pricing sheet.

The bonds (/AAA/AAA) were sold competitively with J.P. Morgan Securities LLC as the winning bidder. The TIC came in at 2.751373%, said Leigh Ann Biernat, vice president for finance and administration for the authority.

The bonds are due 2014 to 2028 with 3.25% to 5% coupons.

"ADFA is not required to sell its debt competitively," Biernat said Tuesday.

"In reviewing the plan of finance, it was determined these bonds were a candidate for a competitive sale."

Proceeds will be used to fund clean and drinking water loans to local governments.

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