Municipals continue to slide; Virginia brings $288 million in G.O. bonds with TIC of 3.17%

By Sheri Kasprzak

New York, Oct. 7 - Municipals once again saw some weakness, with yields up by a couple of basis points, said a trader reached in the afternoon.

"I'm not really sure why," the trader said.

"We're definitely off by a couple of basis points. Treasuries seem to be doing OK, so it's not that. I'm thinking we're just coming down from the last couple of weeks' [gains]."

Chicago's recently priced series 2009A sales tax revenue refunding bonds were seen trading. The 4.25% 2018 bonds were seen at 2.96%, and the 5% 2023s were seen at 3.51%. The 4.25% 2020s were trading at 3.2%.

Elsewhere, American Municipal Power Inc. of Ohio's 6.453% 2034s were trading at 6.186%.

Moving to the primary market, the Commonwealth of Virginia priced Wednesday $288 million in series 2009 general obligation bonds, said a pricing sheet released by a sellside source.

The bonds were sold on a negotiated basis with Merrill Lynch & Co. Inc. as the winning bidder. The true interest cost came in at 3.17%.

The offering included $100 million in series 2009B bonds, $19.9 million in series 2009C bonds and $168.1 million in series 2009D bonds.

The 2009B bonds are due 2011 to 2034 with coupons from 3% to 5%. The 2009C bonds are due 2014 to 2024 with 3% to 4% coupons. The 2009D bonds are due 2016 to 2022 with a term bond due 2010. The coupons range from 2.5% to 5%.

Proceeds will be used to fund general expenditures.

Gwinnett County sells water bonds

In other pricing action, the Gwinnett County Water and Sewerage Authority of Georgia priced $271.775 million in series 2009 revenue bonds, said a pricing sheet.

The sale included $247.82 million in series 2009A revenue bonds and $23.955 million in series 2009B Build America Bonds.

The bonds were sold competitively with Merrill Lynch as the winning bidder. The TIC was 3.33%.

The 2009A bonds are due 2010 to 2028 with coupons from 1.875% to 4%. The 2009B bonds are due 2028 and 2029. The 2028 bonds have a 5.35% coupon, priced at par, and the 2029 bonds have a 5.45% coupon, also priced at par.

Proceeds will be used to fund improvements and extensions to the county's water and sewer system as well as to refund the authority's series 2004 bonds.

The county seat is Lawrenceville, Ga.

California completes retail orders

Coming up on Thursday, the State of California plans to offer to institutional investors the remainder of its $4.5 billion sale of G.O. bonds.

"Individual investor orders in the first day of the two-day retail order period totaled $423.2 million," said Joe DeAnda, spokesman for the state treasurer's office.

"Tax-exempt orders totaled $360.8 million and represent 28% of the $1.3 billion offering to retail investors. Preliminary yields quoted to investors for tax-exempt bonds ranged from 2.87% for 2015 maturities to 4.63% for 2029 maturities.

"Taxable orders totaled $62.4 million for the 2013 maturity, the only maturity offered, and represent 25% of the $250 million offering to retail investors. Preliminary yields quoted to investors for taxable bonds ranged from 3.5% to 3.75%."

Goldman, Sachs & Co., Siebert Brandford Shank & Co. LLC and Morgan Stanley & Co. Inc. are the lead managers for the negotiated offering.

Proceeds will fund capital expenditures.

Dasny, L.A. Metropolitan to price

Also ahead Thursday, the Dormitory Authority of the State of New York plans to price $349.805 million in series 2009 state personal income tax revenue bonds through Goldman Sachs.

Proceeds will be used to fund capital improvements at the City University of New York's community and senior college campuses.

In other news, the Los Angeles Metropolitan Transportation Authority is set to sell $320.935 million in series 2009A sales tax revenue refunding bonds Thursday.

The bonds (Aa3/AAA/) will be sold through Merrill Lynch.

Proceeds will be used to refund debt and repay commercial notes.

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