Munis end weaker as Michigan brings $1.1 billion in notes; Connecticut sells $700 million

By Sheri Kasprzak

New York, Oct. 27 - Municipal yields once again climbed as the market experienced another heavy day of primary action.

Ten-year munis were seen up by about 5 or 6 basis points, according to a trader reached during the afternoon. Longer bonds and shorter bonds were not up by as much, but were up nonetheless.

"Right in the middle [of the curve] seems to be taking the brunt of it," he noted.

Meanwhile, primary action Wednesday was led by the State of Michigan's $1.1 billion sale of series 2011 general obligation notes. Goldman Sachs & Co. brought the notes.

The notes (MIG1/SP-1+/) are due Sept. 30, 2011 and have a 2% coupon priced at 101.399 to yield 0.45%.

According to a sellsider connected to the deal, the offering is a fairly common one for the state.

"They don't do them all the time," he added, "but it's something they do from time to time to fill in budget gaps. It's a fairly routine thing. We're pretty pleased with the results from today."

In December 2008, the state sold $500 million of the notes, which matured on Sept. 30, 2009 and had a 3% coupon priced at 101.049.

Proceeds will be used to meet the state's capital needs during the 2011 fiscal year.

Connecticut sells bonds

Elsewhere, the State of Connecticut reportedly price $700 million in series 2010 transportation infrastructure special tax obligation bonds on Wednesday, but the full terms were not immediately available.

The deal included $200 million in series 2010A bonds, $400 million series 2010B Build America Bonds and $100 million in series 2010C refunding bonds.

Citigroup Global Markets Inc. was the senior manager.

The state intends to use the proceeds to fund capital improvements to its transportation infrastructure, as well as to refund its series 2001A, 2002A and 2002B bonds.

Honolulu bonds price

Moving to the Aloha State, the City of Honolulu sold $306.115 million in series 2010 wastewater system revenue bonds through Bank of America Merrill Lynch and Piper Jaffray & Co., according to a term sheet.

The deal included $25.795 million in series 2010A tax-exempt first-resolution senior bonds (Aa2/AA/AA), $178.64 million in series 2010B taxable first-resolution senior bonds (Aa2/AA/AA) and $100.755 million in series 2010A second-resolution junior bonds (Aa3/AA-/AA-).

The 2010A first-resolution bonds are due 2015 to 2019 with 3% to 5% coupons. The 2010B first-resolution bonds are due 2020 to 2025 with term bonds due 2030 and 2040. The serial coupons range from 4.113% to 5.393%. The 2030 bonds have a 5.996% coupon priced at par, and the 2040 bonds have a 6.121% coupon, also priced at par. The 2010A junior bonds are due 2011 to 2028 with 2% to 5% coupons.

Proceeds will be used to finance capital improvements to the city's wastewater system, as well as to refund its junior series 1998 bonds.

Chicago preps sale

Looking on the horizon, the City of Chicago is gearing up to price $804.285 million in series 2010 G.O. bonds, according to a preliminary official statement.

The offering includes $123.155 million in series 2010A G.O. refunding bonds, $213.59 million in series 2010B Build America Bonds and $467.54 million in series 2010C taxable project and refunding bonds.

The bonds will be sold on a negotiated basis with Loop Capital Markets LLC and Wells Fargo Securities LLC as the senior managers.

Proceeds will be used to finance public right-of-way improvements, economic development enhancement projects, transportation improvements and grants to nonprofit organizations.

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