Los Angeles serves up a $1.2 billion tax and revenue anticipation note sale in the short-term market this week while issuers in New York deliver a pair of substantial deals in the long-term market.

The new activity comes just as investors bid adieu to the first half of 2010 and gear up for an estimated $4.07 billion in new, long-term volume, according to Ipreo LLC and The Bond Buyer.

The volume is noticeably lighter than last week's revised $6.48 billion — a tally that was down from the $8.21 billion originally expected, according to Thomson Reuters.

The municipal market ended the week with a slightly firmer tone amid light to moderate secondary trading activity, but welcomed some larger deals that got attention, such as a $1.5 billion sale of taxable BABs from California's Bay Area Toll Authority that was priced by Bank of America Merrill Lynch.

The final 2050 maturity was priced to yield a 7.043%, or 4.58% after the 35% federal subsidy, and 300 basis points over the 30-year Treasury yield.

The bonds are rated A1 by Moody's Investors Service and A-plus by Standard & Poor's.

The Los Angeles note deal will kick off this week's public finance activity when JPMorgan prices the deal tomorrow. The one-year notes are rated MIG-1 by Moody's, SP1-plus by Standard & Poor's, and F1-plus by Fitch Ratings.

Meanwhile, $485.3 million flowed into tax-exempt money market funds, which closed the week ending June 21 with $352.34 billion in total assets. Another $5.9 billion poured into taxable money market funds, causing them to finish the week with a total of $2.43 trillion, according to the Money Fund Report, a service of iMoneyNet.com.

Amid the planned new-issue activity, there is a possibility that a $900 million sale of Illinois general obligation taxable Build America Bonds could be priced this week, but the deal was still on the day-to-day calendar Friday, according to a source at Citi, the deal's senior book-runner.

In New York, issuers are readying a pair of deals totaling over $1 billion, one of which will boost the availability of BABs at a time when investors continue to search for relatively attractive bonds to replace upcoming July 1 coupon payments and redemption proceeds.

The deals include an unusual $1.3 billion refinancing of the One Bryant Park office tower near Times Square in Manhattan.

The simultaneous issuance of $650 million of refunding Liberty bonds and marketing of $650 million of commercial mortgage-backed securities is what makes the transaction so unusual.

The New York Liberty Development Corp. plans to issue the Liberty bonds on behalf of the building's owners, Bank of America Merrill Lynch and the Durst Organization. The LDC is a subsidiary of the Empire State Development Corp.

The Liberty bonds are planned for pricing Wednesday by Bank of America Merrill. Fitch preliminarily rates the three tranches of Liberty bonds AA, A, and BBB-minus.

The state's Metropolitan Transportation Authority is also planning an appearance with approximately $600 million of revenue bonds — $555 million of Series 2010C-1 taxable BABs and $45 million of Series 2010C-2 tax-exempt bonds, according to the preliminary official statement.

Rated A2 by Moody's, A by Standard & Poor's, and A-plus by Fitch, the MTA offering will be priced by Barclays Capital. The structure was not finalized at press time.

Elsewhere in the Northeast, the Massachusetts Water Pollution Abatement Trust is planning to issue $498.2 million of state revolving funds bonds via negotiated pricing by Goldman, Sachs & Co.

The deal will consist of $164 million of tax-exempt revenue bonds structured to mature from 2011 to 2026; as well as $334 million of taxable BABs.

The structure was still being determined at press time, according to a Goldman source.

The firm will offer the tax-exempt bonds to retail investors today before an official pricing tomorrow, and will take indications of interest on the BABs tomorrow, before the final pricing for those securities Wednesday.

All of the bonds are rated triple-A by all three major rating agencies. The deal's timing, stellar quality, and availability of both tax-exempt bonds and BABs during reinvestment season should make it popular with investors, a New York underwriter said.

"There still seems to be a fair amount of retail demand in the first 10 years for tax-exempt bonds, and there are not many credits that have three triple-A ratings, so it should get a very good reception," the underwriter said. "It's also been close to a year since the trust has been in the market."

He noted that demand in Massachusetts is strong for solid credits as evidenced by a $250 million sale last week from the state itself, as well as the overall tone of the market.

"The commonwealth did very well with its deal and I expect this should be the same," the underwriter said, noting that the final 2020 maturity carried a 5% coupon and was priced to yield 3.22%.

The bonds are rated Aa1 by Moody's, AA by Standard & Poor's, and AA-plus by Fitch.

"The market continues to be favorable as rates are low and the market is telling us that rates will probably stay low for an extended period," he added.

Regional activity continues in Pennsylvania, where the Chester County Health and Educational Facilities Authority and the Philadelphia Hospital and Higher Education Facilities will jointly issue a $355 million revenue financing on behalf of the Jefferson Health System.

The offering — rated Aa3 by Moody's and AA by Standard & Poor's and Fitch — will be priced by Citi tomorrow following a retail order period today.

The structure will consist of serial and term bonds. Details were still being finalized at press time, according to a Citi underwriter.

One of the only other sizable deals on tap is a $235 million financing that will take place in the short-term market when the San Diego Unified School District issues tax and revenue anticipation notes to be priced by Citi today. The notes are expected to mature in 2011 and are rated SP1-plus by Standard & Poor's.

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