Municipal yields flat; California Water Resources takes orders on $2 billion bond offering

By Sheri Kasprzak

New York, May 3 - Municipal yields were mostly flat on Monday, with the long end seeing yields up by about one basis point, said one trader reached during the afternoon.

Meanwhile, the California Department of Water Resources began its retail order period for its $2 billion offering of series 2010L power supply revenue bonds. The department will offer the bonds to institutional investors Tuesday.

"We're holding steady," said the trader of the general tone of the day. "Out long, past 30 years, yields are edging up just a bit, maybe one basis point. On the whole, it's been a pretty quiet day."

Amid the light trading, the Wisconsin Health and Educational Facilities Authority's bonds sold recently for SSM Health Care were traded. The 4.5% 2025 bonds were seen trading near par during the afternoon.

Meanwhile, in the primary market, retail investors got a crack at the California Department of Water Resources' $2 billion in power supply revenue bonds (Aa3/AA-/AA-). Those bonds will be offered to institutional investors on Tuesday, said one sellsider.

"So far, I think it's going OK," said the sellsider.

"They've managed to sell about half so far to retail. There has been a decent amount of demand from retail for California bonds, so I'm sure that's helpful to them."

Morgan Stanley & Co. Inc., E.J. De La Rosa & Co. Inc. and J.P. Morgan Securities Inc. led the syndicate.

The bonds are due 2011 to 2022.

Proceeds will be used to refund outstanding bonds.

LIPA sale ahead

Looking to other offerings on the calendar for the week, the Long Island Power Authority of New York plans to bring to market $410 million in series 2010 electric system general revenue bonds in two tranches, according to preliminary official statements.

The offering includes $200 million in series 2010A tax-exempt revenue bonds and $210 million in series 2010B Build America Bonds. The 2010A bonds are scheduled to price Tuesday. The 2010B bonds will be priced Wednesday.

The 2010A bonds will be offered through senior manager Morgan Stanley.

The 2010B bonds will be sold through lead manager Citigroup Global Markets Inc.

The 2010A proceeds will be used to refund existing debt. Proceeds from the 2010B bonds will be used to fund capital expenditures.

Based in Uniondale, N.Y., the authority acquires real property for electric power infrastructure, as well as purchases power from the Power Authority of the State of New York.

Pennsylvania authority to price

Coming up on Wednesday, the Pennsylvania Intergovernmental Cooperation Authority is set to sell $205 million in series 2010 special tax revenue bonds on Wednesday, according to a sales calendar.

The bonds (Aa2/AA/AA+) will be sold on a negotiated basis. Goldman Sachs & Co. is the senior manager.

Proceeds will be used to contribute to the Philadelphia Funding Program, which assists small-business entrepreneurs.

The Philadelphia-based authority oversees the finances of the city.

Tampa to bring bonds

In other deals, the City of Tampa, Fla., is set to price $200.255 million in series 2010 revenue bonds for Baycare Health System on Tuesday, according to a sales calendar.

The bonds (Aa3//AA-) will be sold through Morgan Stanley.

Proceeds will be used to refund the city's outstanding series 1998A-1 Catholic Health revenue bonds.

Washington airports plans deal

Looking a bit farther out, the Metropolitan Washington Airports Authority is expected to sell $400 million in series 2010 Dulles Toll Road revenue bonds and Dulles Metrorail and capital improvement revenue bonds on May 12, according to a sales calendar. A retail order period is set for May 11.

Citigroup and Morgan Stanley are the senior managers.

Proceeds from the offering will be used to fund road improvements and capital improvements for the Dulles Metrorail project at Washington Dulles International Airport.

The authority, located in Arlington, Va., operates the city's two major airports, Ronald Reagan Washington National Airport and Washington Dulles International Airport.

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