Short bonds get firmer; Chicago sells bonds to retail investors, plans for institutional sale

By Sheri Kasprzak

New York, April 13 - Municipals firmed across the yield curve, market insiders reported, with recently troubled short bonds seeing the most improvement.

"Short is probably down by 3 or 4 basis points," said one trader.

"The long end is feeling better, too, but it's less dramatic. Maybe 1 or 2 basis points lower out long, pretty much out past 10 years."

Secondary action was seen healthy on Tuesday. The State of Illinois' series 2010-2 Build America Bonds were seen trading. The 5.65% 2020 bonds were seen at 5.4% Tuesday afternoon. The 6.75% 2029s were trading at 6.493%.

In primary action, a portion of Chicago's revenue bonds for Chicago O'Hare International Airport priced Tuesday for retail buyers, a sellsider reported. The city sold about $570 million in Build America Bonds to retail investors. The 2038 bonds priced at 215 bps over Treasuries and the 2040s priced at 175 bps over Treasuries for the retail customers.

Institutional investors get a crack at the $1.167 billion sale of series 2010 revenue bonds (A1/A-/A) Wednesday.

Bank of America Merrill Lynch is the lead manager.

The proceeds will be used to refund commercial paper notes as well as modernize Chicago O'Hare International Airport.

Dasny brings Vassar bonds

In other pricing news, the Dormitory Authority of the State of New York priced Tuesday $50 million in series 2010 revenue bonds for Vassar College, said a pricing sheet.

The bonds (Aa2/AA/) were sold on a negotiated basis with J.P. Morgan Securities Inc. as the senior manager.

The 5% bonds are due July 1, 2049 and priced at 101.186.

Proceeds will be used to renovate, construct, improve and repair campus facilities, including student housing, athletic facilities and academic facilities, at Vassar College in Poughkeepsie, N.Y.

The authority, based in Albany, finances projects at independent colleges and universities and private hospitals as well as other nonprofit organizations.

Illinois to price $700 million

Looking to upcoming sales, Illinois is expected to price $700 million in series 2010-3 general obligation taxable Build America Bonds, said a preliminary official statement.

The bonds (A2/A+/A+) will be sold on a negotiated basis with William Blair & Co. Inc. as the senior manager.

Proceeds will be used to provide grants to public schools within the state as well as finance transportation projects and capital projects.

Connecticut deal planned

Also coming up, the State of Connecticut is set to bring to market $642.335 million in series 2010 G.O. bonds and G.O. bond anticipation notes, said a preliminary official statement.

The sale includes $105 million in series 2010A G.O. bonds, $184.25 million in series 2010A taxable G.O. Build America Bonds and $353.085 million in G.O. BANs.

The bonds will be sold on a negotiated basis with M.R. Beal & Co. as the senior manager.

The 2010A G.O. bonds are due 2015 to 2018, and the 2010A G.O. Build America Bonds are due 2019 to 2026. The 2010A BANs are due May 19, 2011.

Proceeds will be used to fund a variety of capital projects throughout the state.

Puerto Rico power to price

The Puerto Rico Electric Power Authority is expected to bring to market series YY power revenue Build America Bonds, said a preliminary official statement. The amount has not been confirmed, but a sellside source told Prospect News that the authority could sell as much as $350 million of the YY bonds and might price another $250 million to $275 million in series ZZ bonds.

The bonds (A3/BBB+/BBB+) will be sold through senior manager Santander Securities.

The bonds are due 2040.

Proceeds will be used to fund capital improvements as well as refund existing power revenue bonds.

Based in San Juan, Puerto Rico, the authority develops and utilizes water and power resources in the commonwealth.

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