After placing two borrowing deals on ice to ride out illiquidity in the municipal market, Puerto Rico is looking to price $1 billion of short-term debt next week and plans on bringing another $400 million of bonds to market at the end of November.

Current plans call for Wachovia Bank NA to kick off on Nov. 6 the $1 billion tax and revenue anticipation note deal with a one-day retail order period. This will be the first time the commonwealth designates a retail-order period within its annual Tran deal. Officials postponed the short-term sale in early October due to market turmoil.

Luis Alfaro, executive vice president and financing director at the Government Development Bank for Puerto Rico, said that the market has shown enough promise for the commonwealth to move forward with the transaction.

The GDB is aiming to sell the short-term debt before California heads back to the market with the second tranche of its revenue anticipation notes. The state sold $5 billion of Rans on Oct. 16 and plans to issue another $2 billion the week of Nov. 10, according to Tom Dresslar, spokesman for state's Treasury Department.

"We're going to go before California because California's pricing the following week, the week after us for the second tranche," Alfaro said. "I believe that there's plenty of liquidity, and remember that we have an advantage - the triple-tax exemption that California doesn't have - but we want to move ahead of them, definitely."

To soak up anticipated retail demand, Puerto Rico will offer a one-day retail order period on the Trans. Alfaro said that move is in response to recent developments in the municipal market.

"The retail market has shown a lot of strength and the majority of the deals that have been done, they have been mostly retail," he said. "So, they have been driving the price on the bonds."

John Mousseau, vice president and portfolio manager at Cumberland Advisors, said that while institutional investors did come back to the market last week in search of tax-exempt securities, issuers overall cannot rely on the institutional market for demand as they used to in the past.

"You're seeing issuers come to market with retail order periods and the retail order periods are gobbling up a lot of bonds," Mousseau said. "And I think issuers are doing that, one, to give a nod to retail and, two, to realize that with the exception of the food fight of last week with institutions coming in as well, by and large institutions have been losing money with insurance companies selling, hedge funds blowing up - I mean, you name it."

The $1 billion of Trans will mature on July 31 and carry a letter of credit with the Bank of Nova Scotia leading a banking syndicate on the enhancement. The group includes KBC Bank, Wachovia, Banco Popular, Banco Bilbao Vizcaya Argentaria, and BNP Paribas.

Following the Trans will be a $400 million new-money Puerto Rico Municipal Finance Agency sale with Merrill Lynch & Co. as book-runner. The bond proceeds will reimburse the GDB for loans that it has extended to municipalities, with property taxes securing the debt.

The GDB expects to issue the debt at the end of November after postponing the deal in early October. While single- and double-A rated issuers have been able to access the market after it dried up following the Lehman Brothers bankruptcy announcement in September, Alfaro said the triple-B rated PRMFA will need to wait a bit longer.

Meanwhile, Mousseau said the credit could have more pricing options once the market stabilizes for high-yield bonds, which would happen probably after Thanksgiving.

"It's like any other market - the first salvo of improved prices goes to the best credits and I think everything else kind of follows along and slowly makes its way down," he said.

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