Competitive offerings from Alabama and Pennsylvania lead the way in the primary new-issue market this week, comprising $1.8 billion of the roughly $10.1 billion of bonds and notes scheduled for sale. The estimate is 34% higher than the $7.5 billion of paper priced in the new-issue market last week, and mark the largest scheduled calendar in more than a month, since $15.8 billion of debt was brought to market the week of Oct. 22.“It is a little unusual in terms of size, but a lot of issuers are trying to get their last deals out before the end of the year,” said Jeffrey Timlin, portfolio manager and vice president at Sage Advisory Services. “Activity generally slows down during Thanksgiving, picks up a little bit for the first two weeks of December, and then the seasonality effect of Christmas takes hold, where you see a slowdown going into the end of the year, with people doing some final re-balancing going into year-end.”“Even though the size of the calendar this week might be unusual, you are still seeing year-to-date issuance at an all-time high,” Timlin said. “On top of that, you are seeing rates back to where we were back in 2003. You’re seeing a lot of issuers coming to market with a lot of debt that has been pending for a while, looking for attractive interest rate levels. We’re now finally in a market where it makes sense to pay for some of these [market] liabilities.”In the week’s largest scheduled offering, the Alabama Public School and College Authority Wednesday will competitively sell about $1.1 billion of capital improvement bonds. The deal represents both the bond market’s largest competitive tax-exempt new money offering of 2007, and the largest debt sale ever by an Alabama state agency.The bonds are slated to mature from 2008 through 2027, and are rated Aa2 by Moody’s Investors Service and AA by Standard & Poor’s. Insurance will be available at the bidder’s option.“We are extremely excited about the opportunity to have this billion dollar sale next week,” said James Main, the state’s finance director. “It will upgrade facilities and educational opportunities in Alabama to the extent never before dreamed of.”Proceeds from the sale will provide funds for construction and repairs to city and county K-12 school systems, along with public two- and four-year colleges.Public FA Inc. is financial adviser. Bradley Arant Rose & White LLP is bond counsel.The Alabama Public School and College Authority last competitively sold capital improvement bonds in March 2006. Banc of America Securities LLC won that $52.5 million deal, with a true interest cost of 4.23%. The bonds mature from 2007 through 2026, with yields ranging from 3.48% with a 4% coupon in 2008 to 4.42% with a 4.25% coupon in 2026. Bonds maturing in 2007, and from 2020 through 2024 were not formally re-offered. The bulk of the deal came to market uninsured, though bonds maturing in 2018, 2025, and 2026 were backed by MBIA Insurance Corp.Among 5% coupon paper in the deal, all bonds were priced 10 basis points over that day’s Municipal Market Data triple-A yield curve.Pennsylvania will competitively sell $706 million of new-money and refunding general obligation bonds tomorrow in three series. Bonds from the first series — $565 million of Series A new-money GOs — mature from 2008 through 2027. Bonds from the second series — $23 million of Series B new-money GOs — also mature from 2008 through 2027. Bonds from the third series —$118.1 million of GO refunding bonds — mature from 2008 through 2011.Pennsylvania’s credit is rated Aa2 by Moody’s, and AA by both Standard & Poor’s and Fitch Ratings.“Pennsylvania paper is traditionally priced well in the market and we would hope to see anywhere from five to seven bidding syndicates, so we would expect to be well received in the market,” said Rick Dreher, director of the Bureau of Revenue Cash Flow and Debt in the commonwealth’s budget office.Eckert Seamans Cherin & Mellott, LLC is bond counsel. Public Financial Management Inc. is financial adviser.The commonwealth last competitively sold GOs in May in two series. Merrill Lynch & Co. won that $373 million deal, with a TIC of 4.28%. Bonds from the larger $346 million series mature from 2008 through 2027, with yields ranging from 3.75% in 2010 to 4.06% in 2020, all with 5% coupons. All remaining bonds were not formally re-offered. Bonds from the smaller $27 million series mature from 2008 through 2027, and were all not formally re-offered. Bonds from the larger series were uninsured, while bonds from the smaller series were insured by CIFG Assurance NA.Among 5% coupon paper in the deal, bonds maturing from 2014 through 2020 were tightest to that day’s MMD triple-A yield curve, with bonds eight basis points over the curve. Bonds maturing from 2010 through 2013 were widest to the scale, with yields nine basis points over.In other activity, Siebert Brandford Shank & Co. Wednesday will price $535 million of GOs for Connecticut, following a retail order period today and tomorrow. The bonds will be priced in three series — $300 million of new-money GOs, $188.7 of GO refunding bonds, and $46 million of taxable GO bonds.Moody’s rates the debt Aa3, while both Standard & Poor’s and Fitch rate it AA.Levy & Droney PC, Lewis & Munday, Nixon Peabody LLP, Pullman & Comley LLC, Robinson & Cole LLP, and Shipman & Goodwin LLP are bond counsel. P.G. Corbin & Co. and Acacia Financial Group Inc. are co-financial advisers for the deal. Merrill Lynch tomorrow will price $479 million of commercial paper for the New York City Municipal Water Finance Authority, following a retail order period today. The credit is rated Aa2 by Moody’s, AA-plus by Standard & Poor’s, and AA by Fitch. “This is a high-quality issuer, so we hope that we will have a good reception,” said Robert Lamb, president of Lamont Financial Services Corp., one of the issuer’s financial advisers. “This is a frequent issuer and it’s a reasonable size issue, so we are hoping it will get a good reception.”“Our view is that we are coming with a very strong AA credit to which we would expect investors to respond to given the market environment,” added Patrick McCoy, MWFA’s executive director.Lamont Financial Services and Ramirez & Co. are financial advisers. Orrick, Herrington & Sutcliffe LLP is bond counsel.
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