Muni yields seen slightly weaker; billions expected from Illinois and Puerto Rico Sales Tax

By Sheri Kasprzak

New York, Jan. 25 - Municipal yields were seen slightly weaker on the long end of the curve while short- to intermediate-term bonds were mostly unchanged, a trader said Monday afternoon.

"It's kind of mixed," she said. "Yields are a bit higher out long, but the short end looks pretty flat."

Munis, the trader said, were following along with Treasuries, which were weaker on Monday.

Amid the light trading activity, the St. Cloud Health Care Facilities Authority's revenue bonds sold for CentraCare Health System were moving. The 5.125% 2030 bonds were trading at 4.898% after pricing Thursday.

Elsewhere, the Florida Department of Environmental Protection's series 2010B Build America Bonds were seen in action. The 7.045% 2029s were trading at 6.101%.

Puerto Rico Sales Tax to price

Looking to the primary market, the largest sale of the week will come on Wednesday from the Puerto Rico Sales Tax Finance Corp. The corporation is scheduled to price $1.4 billion in series 2010A first subordinate sales tax revenue bonds, and talk that the bonds will go a bit cheap is already buzzing in the market.

"Typically, their bonds do go a little on the cheap side, so I would expect about the same for this sale as well," said one sellsider asked Monday about the offering.

"Their ratings are OK, but Puerto Rico is an iffy name, and investors do approach with caution."

The bonds (A2/A+/A) will be brought to market through Citigroup Global Markets Inc. and Bank of America Merrill Lynch.

Proceeds will be used to fund capital projects.

Illinois's billion-dollar deal ahead

Coming on Thursday is the second-largest sale of the week. The State of Illinois is set to price $1 billion in series 2010-1 taxable general obligation Build America Bonds (A2/A+/A) through Barclays Capital Inc.

Those bonds are due 2011 to 2020 with term bonds due 2022 and 2035.

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

New York water bonds to price

On Tuesday, the New York City Municipal Water Authority is set to bring $400 million in series 2010DD second general resolution revenue bonds (//AA) with Ramirez & Co. Inc. as the senior manager.

Proceeds will be used to fund the authority's capital improvement program.

Asante Health bonds planned

Also ahead, the Hospital Facilities Authority of the City of Medford, Ore., is expected to sell $175 million in series 2010 hospital revenue refunding bonds during the week, said a preliminary official statement. The bonds will be sold for Asante Health System.

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

The bonds are due 2011 to 2021 with term bonds due 2025, 2030, 2035 and 2040.

Proceeds will be used to refund the system's series 2008 bonds as well as reimburse the system for construction and renovation projects.

Ohio to sell University Hospitals bonds

The State of Ohio is expected to price $100 million in series 2010A-B hospital revenue bonds for University Hospitals Health System Inc., said a preliminary official statement.

The bonds (A2) will be sold on a negotiated basis with Bank of America Merrill Lynch and Citigroup as the senior managers.

Proceeds will be used to fund the construction, renovation, equipment and acquisition of hospital facilities as well as refund a portion of the health system's series 2008A-E bonds.

University Hospitals Health System is based in Cleveland.

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