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Market Slims Down in Advance of Holiday Scarcity

Volume is expected to trail off to less than $3 billion in what will be the last five-day trading week of 2013. A pair of Northeast deals will lead an otherwise skimpy slate of new issuance in the primary market ahead of the year-end holiday hiatus.

A $525 million sale of consolidated general obligation bonds from Massachusetts is planned for Tuesday in the competitive market, while a $283 million Pennsylvania Economic Development Financing Authority sale to fund the city of Harrisburg's 40-year lease of its parking assets is planned for negotiated pricing on Tuesday after a retail order period on Monday.

The deals are part of the $2.58 billion in long-term total new volume that issuers are expected to sell this week, according to Ipreo LLC and The Bond Buyer, as issuers make one last trip to market before the usual holiday scarcity sets in next week, underwriters said.

The decreased supply comes on the heels of the revised $10.63 billion that actually came to market last week, according to Thomson Reuters, including a $1.2 billion sale of Empire State Development Corporation New York State Urban Development Corp. personal income tax general purpose revenue bonds. The longest 2043 maturity was priced with a 5% coupon and 4.50% yield at the time that the generic triple-A GO scale in 2043 yielded a 4.16%, according to Municipal Market Data.

Also last week, Foothill/Eastern Transportation Corridor Agency priced $2.26 billion of toll road revenue bonds.

The market absorbed last week's meaty calendar and reacted to the news that $52 billion of Puerto Rico bonds were put on review for a possible downgrade to junk by Moody's Investors Service. Traders said yields on the commonwealth's paper in the secondary market rose at least 15 basis points higher than the prior day and were expected to rise higher.

This week, the Massachusetts deal is structured to mature serially from 2016 to 2043.

The parking lease deal, meanwhile, is part of the financial recovery plan the state's capital city and will be priced by Guggenheim Securities LLC, which conducted a lengthy investor road show that also includes internet sessions Monday and Tuesday.

The deal consists of $116.9 million of Series A 2013 senior parking revenue bonds, $99 million of Series B junior guaranteed parking revenue bonds and $71 million of Series C junior insured/guaranteed parking revenue bonds. The state board will lease parking garages, spaces and street meters to Harrisburg First, a consortium consisting of Guggenheim Securities, Piper Jaffray & Co., Standard Parking Corp. and Trimont Real Estate Advisors.

Series A is rated Baa3 by Moody's Investors Service and BBB by Standard & Poor's and is expected to be insured by Assured Guaranty Municipal Corp. Series B and C are rated A1 by Moody's and AA by both of the other major rating agencies.

The Lancaster County Solid Waste Management Authority, meanwhile, will sell a separate $132 million offering of tax-exempt revenue bonds on Monday and Tuesday to finance the incinerator bond financing overruns for Harrisburg's trash facility account. Dauphin County has backed the B tranche with its GO guarantee, while C Series has a double-barreled guarantee from the county and Assured Guaranty Municipal Corp.

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