Munis ready for supply surge; New York State prices $454.74 million; Calif. Water plans $278.87 million

By Cristal Cody and Aaron Hochman-Zimmerman

New York, March 6 - Municipals closed out the week on a quiet note in trading, but the State of New York priced $454.735 million general obligation bonds, which put another pile of supply in the market.

Many market watchers are starting to fear possible saturation, sources said.

Plus, next week "will be a nice busy week," a trader said "You're really seeing it start to ramp up."

The market from "week to week is just unpredictable," said Jeff Rink, director of capital markets at KeyBanc in Cleveland.

"If you're an AA credit ... you should be able to continue getting deals done," he said. "The pricing is really the main issue."

Still, the market is not "fully back to where we were 12 to 18 months ago," he said.

Retail interest is "still strong," he said, and "institutional is still coming back."

New York prices $454.74 million

The State of New York priced $454.735 million in G.O. bonds, according to Jennifer Freeman, spokeswoman for the state comptroller's office.

The issue was split into two tranches.

The $415.970 million series 2009A tax-exempt bonds carry maturities from 2010 to 2039.

The $38.765 million series 2009B taxable bonds carry maturities from 2010 to 2019.

Retail investors claimed 73% of the offer, and institutional investors purchased 27%, Freeman said.

J.P. Morgan Securities Inc. was the lead underwriter for the negotiated bonds.

Proceeds will be used for water, environmental quality and transit projects.

Metropolitan Transportation, Sentara Healthcare to price

Other large sales are on the horizon in New York and Virginia.

The Metropolitan Transportation Authority in New York plans to price $255 million in series 2009A dedicated tax fund bonds, according to a preliminary official statement.

The bonds will price through a negotiated sale led by senior manager Citigroup Global Markets Inc.

The proceeds will be used to finance transit and commuter projects.

The Economic Development Authority of Norfolk in Virginia plans to sell $201.505 million in hospital facilities revenue and refunding bonds for Sentara Healthcare, according to a preliminary official statement.

The sale includes $68.925 million in series 2009A long-term interest rate bonds, $68.92 million in series 2009B long-term interest rate bonds and $63.66 million in series 2009C weekly interest rate bonds.

The bonds (Aa2/AA/) will be sold through a negotiated sale managed by Citigroup Global Markets.

The proceeds will be used to refund the series 2004A, 2004B and 2004C revenue bonds.

New York TFA raises $400 million

Other big news from New York came through as the New York Transitional Finance Agency priced $400 million in revenue bonds to yield up to 5.73%, according to details released on Friday.

The agency sold the series 2009S4 building aid revenue bonds (A1/AA-/A+) on Wednesday.

The serial maturities from 2011 through 2030 priced with 2.50% to 5.50% coupons to yield 2.00% to 5.59%.

The 2033 term bond priced with a 5.50% coupon to yield 5.65%, and the 2034 term priced with a 5.50% coupon to yield 5.67%.

Two terms due in 2039 priced with 5.50% to 5.75% coupons to yield 5.73%.

Goldman, Sachs & Co. and Citigroup Global Markets were the senior managers of the negotiated sale.

The proceeds will be used to pay a portion of the costs for the agency's five-year school building plans.

California Water dreamin' of $278.87 million

Coming up in a large sale on Wednesday, the California Department of Water Resources hopes to price $278.87 million in revenue bonds to pay off debt, according to the state treasurer's office.

The series AF Central Valley project water system bonds have serial maturities from Dec. 1, 2009 through Dec. 1, 2032.

Morgan Stanley & Co. Inc. will be the senior manager of the negotiated sale.

The proceeds will be used to refund a portion of the series 1996Q, 1997T and 1998U water system revenue bonds; retire the $30.564 million outstanding in series 1 water revenue commercial paper notes that mature by April 7, 2009; make a deposit to the debt service reserve account; and fund interest on a portion of the bonds through Dec. 31, 2009.

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