N.Y. Thruway's $700M Note Sale Leads Post-Holiday Slate

With most of the municipal market still in holiday mode this week, the short-term market will dominate the official first full week of the third quarter with a planned $700 million note sale from the New York State Thruway Authority.

In the long-term market, new-issue activity will all but fizzle out as only a few relatively large deals are expected, the largest of which is $210 million of revenue debt from the California Infrastructure and Economic Development Bank.

On the heels of a sparse, four-day trading week ahead of the July 4 holiday, this week there is an estimated $3.83 billion arriving in the negotiated and competitive markets combined, according to Ipreo LLC and The Bond Buyer.

Robust volume helped plump up the municipal market in the first half of the year. However, the primary market began to show signs of a summer-induced supply drought last week when it saw a revised $1.91 billion in total new volume, according to Thomson Reuters.

This week's Thruway Authority general revenue bond anticipation note sale is planned for pricing on Wednesday by Citi. The notes, which mature in 2011, are expected to be rated MIG-1 by Moody's Investors Service and SP1-plus by Standard & Poor's.

Back in the long-term market, the new-issue activity in the Northeast region will also include a $136.7 million Dormitory Authority of the State of New York revenue sale on behalf of the University of Rochester.

The Dorm deal is expected to be priced on Wednesday by senior manager Barclays Capital after a retail order period tomorrow. The bonds are rated Aa3 by Moody's and A-plus by Standard & Poor's, though the maturity structure was not available by press time.

In California, the infrastructure and development bank offering will be priced by RBC Capital Markets LLC on Wednesday following tomorrow's retail order period.

The bonds, which carry ratings of A2 from Moody's, A from Standard & Poor's, and AA-minus from Fitch Ratings, are structured to mature serially from 2012 to 2024 with term bonds available in 2034 and 2039.

Among the few somewhat sizable deals taking place this week are the Thursday pricing of $200 million of revenue debt from Chicago-based Rush University Medical Center by Morgan Stanley. Also this week is the pricing of $147.6 million of Arizona Water Infrastructure Finance Authority revenue and refunding bonds by Morgan Stanley.

The structure of the hospital deal was unavailable at press time. The Arizona deal - which has natural triple-A ratings from all three major rating agencies - will include new-money and refunding debt. The maturity structure was not available by press time.

The largest deal to price last week was a $233.1 million Orange County, Calif., revenue offering on behalf of John Wayne Airport priced by Citi on Tuesday.

The final 2039 maturity on the refunding portion carried a 51/4% coupon and a top yield of 5.55% - 89 basis points higher in yield than the generic, triple-A general obligation yield curve in 2039, which was yielding 4.66% on the day of the pricing, according to Municipal Market Data. The airport bonds were rated Aa3 by Moody's and AA-minus by Fitch.

On Thursday, the generic, triple-A GO scale in 2039 ended at a 4.66% yield, according to MMD.

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