Munis seen unchanged to slightly weaker; Illinois sells $1 billion with 1.395%-6.63% yields

By Sheri Kasprzak

New York, Jan. 28 - Municipals were once again seen mostly unchanged to slightly weaker on Thursday, with most of the weakness seen on the long end of the yield curve. On the primary side, market insiders focused their attention on a $1 billion sale from the State of Illinois.

"The long end has really taken a beating all week long," noted one trader when asked about the trend of weakness out long during the course of the week.

"It's hard to say what's pushing yields up out there, but the rest of the curve has been unchanged."

Amid light trading action, Puerto Rico Sales Tax Financing Corp.'s series 2010A subordinate bonds were seen in demand. The 5.5% 2037 bonds were trading at 5.454% Thursday, and the 5% 2040s were seen at 5.04%.

The bonds recently priced by St. Cloud, Minn., for CentraCare Health System were moving. The 5.125% 2030 bonds were trading at 4.898%.

Illinois brings $1 billion

Meanwhile, all eyes were on Illinois' $1 billion offering of series 2010-1 taxable general obligation Build America Bonds on Thursday.

The bonds (A2/A+/A) were sold through Barclays Capital Inc.

The bonds are due 2011 to 2022 with a term bond due 2035. The serials have 1.395% to 5.663% coupons, all priced at par. The 2035 bonds have a 6.63% coupon, also priced at par.

In reoffering news, the 2035s were seen at 6.61% after trading throughout the day between 6.593% and 6.63%. The 5.463% 2019 bonds were trading at par.

Proceeds will be used to fund capital facilities and infrastructure projects.

Southern California power bonds price

Elsewhere in primary action, the Southern California Public Power Authority priced $217.475 million in series 2010-1 Milford Wind Corridor Phase I project revenue bonds, said a term sheet.

The bonds (A1/AA-/) were sold through Barclays.

The bonds are due 2011 to 2030. The coupons range from 2% to 5%.

In reoffering news, the 5% 2019 bonds were seen moving at 3.49%, the same as pricing.

Proceeds will be used to fund the prepayment of a supply of electricity from the Milford Wind Corridor.

The authority is based in Pasadena, Calif.

Virginia housing bonds sold

Also priced on Thursday, the Virginia Housing Development Authority priced $107.33 million in series 2010A non-AMT mortgage bonds, said a pricing sheet.

The bonds (Aa1/AA+/) were sold through Morgan Keegan & Co. Inc.

The bonds are due 2011 to 2021 with 0.65% to 4.1% coupons, all priced at par.

Proceeds will be used to fund mortgage loans.

Scripps Health deal ahead

Out on the horizon, the California Health Facilities Finance Authority is set to sell $100 million in series 2010 variable-rate revenue bonds for Scripps Health in two tranches, said preliminary official statements.

The offering includes $60 million in series 2010B bonds and $40 million in series 2010C bonds.

The bonds (Aaa/VMIG 1/AAA/A-1+/) will be sold on a negotiated basis. J.P. Morgan Securities Inc. is the senior manager for the 2010B bonds, and Barclays is the lead manager for the 2010C bonds.

Both series of bonds are due 2040.

Proceeds will be used to fund construction costs at Scripps-owned hospital facilities.

Scripps Health is based in San Diego.

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