Municipals end slow session unchanged; Harvard prepares $480 million sale of revenue bonds

By Sheri Kasprzak

New York, Jan. 8 - Municipals closed out the week with little trading action and with yields little moved, market insiders reported.

A trader reached in the afternoon said there wasn't much trading, but there was a lot of demand for the Florida Department of Environmental Protection's recently priced series 2010B Build America Bonds.

"Yields were down about 30 basis points this afternoon from pricing, so it's doing very well in secondary," the trader said.

"There really has been a lot of interest in these. I'm going to speculate that it's a fairly well-rated name that just doesn't pop up that often. It's not a frequent issuer, so buyers are interested."

The 7.045% 2029 bonds were seen in the afternoon at 6.75% after pricing Thursday at par.

Elsewhere, a sellside source reacted Friday afternoon to the State of Illinois' $3.466 billion sale of taxable general obligation bonds.

"It really came better than I thought," he said Friday morning after the Thursday sale.

"There was a sense in the market that it might go cheap or even be downsized, but that wasn't the case. Their ratings are OK, and that might have helped. It might be a precedent for how Illinois bonds go for the rest of the year, which is a good thing."

Market sources predicted before the sale that the bonds might go cheap.

The bonds (A2/A+/A) are due 2011 to 2015 with coupons from 1.823% to 4.421%, all priced at par.

J.P. Morgan Securities Inc. was the senior manager.

Proceeds will be used to make contributions to the state's retirement fund as well as fund capital expenditures.

Harvard plans $480 million deal

Looking to the coming week's offerings, Harvard University of Cambridge, Mass., is gearing up to sell $480 million in series 2010A revenue bonds, according to a sales calendar. The pricing is expected for Wednesday.

The bonds (Aaa) will be sold through senior manager Barclays Capital Inc.

Proceeds will be used to refinance previously issued debt and commercial paper.

Coming up on Thursday, the Lower Colorado River Authority in Texas is set to sell $424.885 million in series 2010 refunding revenue bonds, said a sales calendar.

The bonds (A1/A/A+) will be sold through Barclays Capital, and proceeds will be used to refund existing debt.

Also coming up during the week, the City of Chicago plans to price $773 million in series 2009 taxable project G.O. bonds through Siebert Brandford Shank & Co. LLC.

The offering includes $420 million in series 2009A refunding bonds, $110 million in series 2009B refunding bonds, $110 million in series 2009C refunding bonds and $133 million in series 2009D recovery zone economic development bonds.

Proceeds will be used to fund public right-of-way infrastructure improvements, finance infrastructure improvements to encourage economic development, conduct transportation improvements and make grants to educational and nonprofit organizations as well as refund existing debt.

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