Munis Unchanged; Market Consumes Heavy Slate

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The municipal market was unchanged to slightly firmer yesterday, as participants digested the week's heaviest slate of new issuance in the primary market.

"It's very quiet right now with a lot of people out on vacation," a trader in New York said. "The market is kind of unchanged, maybe up a basis point on the cleaner names. There are some arbs out there trying to buy clean paper on the long end. The market is just kind of hanging in there."

"The market feels strong, not many bonds around," a trader in Chicago added. "It hasn't been super crowded with paper."

The Treasury market showed some gains yesterday. The yield on the benchmark 10-year Treasury note, which opened at 3.83%, finished at 3.79%. The yield on the two-year note was quoted near the end of the session at 2.24% after opening at 2.29%. The yield on the 30-year Treasury finished at 4.44% after opening at 4.46%.

In the new-issue market yesterday, Morgan Stanley priced $917.6 million of revenue bonds for the Arizona Health Facilities Authority. The bonds mature from 2009 through 2032, with a term bond in 2038. Yields range from 2.21% with a 5% coupon in 2009 to 5.67% with a 5.5% coupon in 2038. All bonds are callable at par in 2018, except those maturing in 2030, which are callable at par in 2013. The bonds are rated AA-minus by both Standard & Poor's and Fitch Ratings.

Goldman, Sachs & Co. priced $659.3 million of second general highway and bridge trust fund bonds for the New York State Thruway Authority. The bonds mature from 2009 through 2028, with yields ranging from 2.12% with a 3% coupon in 2010 to 4.64% with a 5% coupon in 2028. The bonds, which are callable at par in 2018, are rated AA by Standard & Poor's and AA-minus by Fitch.

The Maryland Department of Transportation competitively sold $280 million of consolidated transportation bonds to Citi, with a true interest cost of 4.00%. The bonds mature from 2011 through 2023, with yields ranging from 2.46% with a 3% coupon in 2011 to 4.19% with a 4% coupon in 2021. Bonds maturing in 2022 and 2023 were not formally re-offered. The bonds, which are callable at par in 2018, are rated Aa2 by Moody's Investors Service, AAA by Standard & Poor's, and AA by Fitch.

Morgan Stanley priced $254 million of pollution control revenue refunding bonds for Jasper County, Ind., in multiple series. Bonds from the $37 million Series 1988-A mature in 2016, yielding 5.60% priced at par. Bonds from the $47 million Series 1988-B mature in 2016, yielding 5.60% priced at par. Bonds from the $46 million Series 1988-C mature in 2016, yielding 5.60% priced at par. Bonds from the $10 million Series 1994-A mature in 2010, yielding 4.15% priced at par. Bonds from the $18 million Series 1994-B mature in 2013, yielding 5.20%, priced at par. Bonds from the $41 million Series 1994-C mature in 2019, yielding 5.85%, priced at par. Bonds from the $55 million Series 2003 mature in 2017, yielding 5.70% priced at par. None of the bonds are callable. Bonds from all series except the $55 million Series 2003 are insured by MBIA Insurance Corp. Bonds from the 2003 series are insured by Ambac Assurance Corp. The underlying credit is rated Baa2 by Moody's and BBB-minus by Standard & Poor's.

Citi priced $187.8 million of water and sewer system revenue bonds for North Carolina's Cape Fear Public Utility Authority. The bonds mature from 2010 through 2028, with term bonds in 2031 and 2035. Yields range from 2.13% with a 3.5% coupon in 2010 to 4.81% with a 5% coupon in 2035. The bonds, which are callable at par in 2018, are rated Aa3 by Moody's and AA by Standard & Poor's.

JPMorgan priced $165.6 million of revenue bonds for the Connecticut Health and Educational Facilities Authority. The bonds mature in 2033 and 2037, yielding 5.02% with a 5.75% coupon and 5.13% with a 5% coupon, respectively. The bonds, which are callable at par in 2018, are insured by MBIA. The underlying credit is rated A2 by Moody's and A-minus by Standard & Poor's.

Tennessee competitively sold $125.8 million of general obligation bonds to Wachovia Bank NA, with a TIC of 4.05%. The bonds mature from 2009 through 2028, with yields ranging from 2.42% with a 5% coupon in 2010 to 3.62% with a 3.5% coupon in 2018. Bonds maturing in 2009 will be decided via sealed bid. Bonds maturing in 2010, and from 2019 through 2028, were not formally re-offered. The bonds, which are callable at par in 2016, are rated Aa1 by Moody's and AA-plus by both Standard & Poor's and Fitch.

Tennessee also competitively sold $15.4 million of taxable GOs. Morgan Keegan & Co. won this deal, with a TIC of 5.28%. These bonds mature from 2009 through 2024, with a term bond in 2028. Coupons range from 5% in 2009 to 5.7% in 2028. None of the bonds, which are callable at par in 2018, were formally re-offered.

JPMorgan priced for retail investors $107.4 million of lease revenue bonds for the Los Angeles Municipal Improvement Corp. The bonds mature from 2009 through 2026, with yields ranging from 1.76% with a 3.5% coupon in 2009 to 4.90% with a 4.75% coupon in 2026. Bonds maturing from 2019 through 2022, and in 2024 and 2025 were not offered during the retail order period. The bonds, which are callable at par in 2018, are rated A2 by Moody's and AA-minus by both Standard & Poor's and Fitch.

The South Carolina Association of Governmental Organizations competitively sold $70.6 million of certificates of participation to Citi, with a TIC of 1.54%. The bonds mature in March 2009, yielding 1.54% with a 3% coupon. The credit is rated Aa1 by Moody's.

Banc of America Securities LLC priced $43.9 million of refunding and improvement certificates of participation for South Carolina's North Charleston Public Facilities Corp. The bonds mature from 2009 through 2021, with yields ranging from 2.10% with a 4% coupon in 2009 to 4.44% with a 4.25% coupon in 2021. The bonds, which are callable at par in 2018, are rated AA-minus by Standard & Poor's.

Banc of America also priced $25 million of solid waste disposal revenue bonds for the Miami-Dade County Industrial Development Authority, subject to the alternative minimum tax. The bonds mature in 2023, yielding 5.40% priced at par. The bonds are rated BBB by Standard & Poor's.

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