Municipals market firms in light session; Suffolk County Water Authority brings $166.4 million

By Sheri Kasprzak

New York, Nov. 9 - Municipals kicked off the week on a sweeter note, said market insiders, as the long end of the yield curve achieved some firmness.

"We're feeling a lot firmer out on the long end of the curve," said one trader reached in the afternoon.

"Last week was a real struggle, but it feels a lot better today. It could be a lot of things. It's a short week, so there's less going on in primary, but we do have that California [Statewide Development Authority] deal tomorrow, but it's pretty quiet [in primary] otherwise."

The Veterans Day holiday on Wednesday will shorten the number of days available to price bonds, the trader noted, and this might allow for more action in the secondary market.

Meanwhile, the Suffolk County Water Authority of New York priced Monday $166.4 million in series 2009 water system revenue bonds (/AA+/AA+), said a sellside source.

The deal included $100 million in taxable Build America Bonds and $66.4 million in tax-exempt bonds.

Barclays Capital Inc. won the competitive bid on the Build America Bonds with a 5.78% true interest cost, and Prager, Sealy & Co. won the tax-exempt bonds with a 4.36% TIC.

The Build America Bonds, which are due 2035, have a 5.5% coupon to yield 5.72%. The tax-exempt bonds are due 2011 to 2035 with yields from 1% to 4.75%.

Goldman, Sachs & Co. was the financial adviser.

Proceeds will be used to finance the authority's five-year capital program, which includes improvements to the county's water and sewer system, and refund existing debt.

The county seat is Riverhead, N.Y.

California Statewide deal ahead

Looking to Tuesday, the California Statewide Development Authority is set to sell $1.5 billion in series 2009 State of California Proposition 1A receivables program revenue bonds (Baa1/A/BBB).

Goldman Sachs is the senior manager for the bonds, which are due June 15, 2013.

Proceeds will be used to repay borrowings from local property taxes.

Iowa student loan bonds planned

Out on the horizon, the Iowa Student Loan Liquidity Corp. is expected to sell $231.86 million in series 2009 student loan revenue bonds, said a preliminary official statement.

The deal includes $166.775 million in series 2009-1 bonds, $23.15 million in series 2009-2 bonds and $41.935 million in series 2009-3 bonds.

The bonds (A1/A/) will be sold on a negotiated basis with Merrill Lynch & Co. as the senior manager.

The 2009-1 bonds are due 2010 to 2018 with term bonds due 2022, 2027 and 2031. The 2009-2 bonds are due 2025, and the 2009-3 bonds are due 2018, 2019 and 2024.

Proceeds will be used to fund student loans.

The corporation is based in Des Moines.

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