New York City priced the primary's largest scheduled transaction yesterday — which was nearly double the size it was initially planned for — as the overall municipal market was unchanged to slightly firmer.

The city's $883 million general obligation bond offering was priced and repriced by senior manager Morgan Stanley. The deal was co-managed by Citi, JPMorgan, and Merrill Lynch & Co. It was originally slated to be $483 million, but was increased by $100 million during the retail order period on Friday, and then by an additional $300 million yesterday morning.

Alan Anders, the city's deputy director for finance, said they were hopeful that they would be able to increase the deal to $600 million, "but the fact that the market was strong enough that we could pick up another $200 million without increasing our spreads in the marketplace was great."

Bonds from the $800 million Series I mature from 2011 through 2029, with term bonds in 2031, 2035, and 2036. Yields range from 1.90% with a 2.25% coupon in 2011 to 5.55% with a 5.375% coupon in 2036. The bonds are callable at par in 2019 and are uninsured. Bonds from the $50 million Series C contain split maturities in both 2028 and 2029, with yields of 5.17% in 2028 and 5.23% in 2029. The coupons are 5.125% and 5.75% in 2028 and 5.125% and 5% in 2029. The bonds are callable at par in 2019, and are insured by Assured Guaranty Corp.

The deal also contains a $33 million taxable series, which matures in 2016 and 2017. The underlying credit is rated Aa3 by Moody's Investors Service, AA by Standard & Poor's, and AA-minus by Fitch Ratings.

"It was a good week in the marketplace but it's gratifying to see that we get good support when there's a good week," Anders said. "We had a long list of institutional orders and we were oversubscribed in the institutional order period today, after having had a very strong retail order period."

Anders said the city was able to tighten its spread relative to their last deal, and they were able to reduce yields in a couple of maturities. In the city's last GO sale, in late February of this year, yields ranged from 109 basis points over that day's Municipal Market Data triple-A yield curve to 161 basis points over. Today's yields range from 70 basis points over the scale to 133 basis points over.

Also, according to Anders, they received $546 million of retail orders and filled $454 million of those.

"It's one of our strongest retail order periods," Anders said.

Two weeks ago, California increased their planned $4 billion GO sale to $6.5 billion due to higher-than-anticipated demand. The deal was priced with a high yield of 6.10% with a 6% coupon in 2038. The state carried ratings of A2 by Moody's and A by Standard & Poor's and Fitch into the pricing.

Traders said yields in the secondary market yesterday were lower by up to two basis points.

"There's definitely some firmness out there," a trader in New York said. "The more you go out the curve, the more you get. I think we're better a good basis point or two on the long end, but maybe flat to a basis point better on the short end. But there's a firmer tone to the market today."

"I'm not seeing too much movement, but we're feeling a bit firmer," a trader in Los Angeles said. "Bonds are probably cheaper by a basis point or two, and there's decent activity in the secondary. But I don't think you can bump the scale any further than that today."

Elsewhere in the new-issue market yesterday, Washington competitively sold $441 million of various purpose general obligation bonds to JPMorgan at a true interest cost of 4.53%. The bonds mature from 2010 through 2029, with term bonds in 2031 and 2034. Yields range from 2.28% with a 5% coupon in 2014 to 5.05% with a 5% coupon in 2034. Bonds maturing in 2010 will be decided via sealed bid. Bonds maturing from 2011 through 2013 were not formally re-offered. The bonds, which are callable at par in 2019, are rated Aa1 by Moody's, AA-plus by Standard & Poor's, and AA by Fitch.

Citi priced $210.3 million of taxable power supply system revenue bonds for the Indiana Municipal Power Agency. Bonds from the $194.3 million Series B mature from 2024 through 2029, with term bonds in 2034 and 2039. Bonds from the $16 million Series C mature in 2024. The credit is rated A1 by Moody's and A-plus by Standard & Poor's.

Banc of America Securities LLC priced $90 million of health care facilities revenue bonds for the Wisconsin Health and Educational Facilities Authority. The bonds mature from 2011 through 2024, with a term bond in 2030. Yields range from 2.76% with a 4% coupon in 2011 to 5.96% with a 5.75% coupon in 2030. The bonds, which are callable at par in 2019, are rated Aa2 by Moody's and AA-minus by Standard & Poor's.

The Treasury market showed some gains yesterday. The yield on the benchmark 10-year note, which opened at 2.93%, was quoted near the end of the session at 2.90%. The yield on the two-year note was quoted near the end of the session at 0.92% after opening at 0.93%. The yield on the 30-year bond, which opened at 3.72%, was quoted near the end of the session at 3.71%.

As of Monday's close, the triple-A muni scale in 10 years was at 108.5% of comparable Treasuries, according to MMD. Additionally, 30-year munis were 126.9% of comparable Treasuries. Also as of the close Monday, 30-year tax-exempt triple-A rated GOs were at 137.1% of the comparable London Interbank Offered Rate.

The economic calendar was light yesterday.

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