Utah, Washington, Georgia Deals Lead $5.7 Billion Slate

Two $700 million offerings - one from the Utah Transit Authority and the other from Washington's Energy Northwest - and a $600 million deal from the Georgia State Road & Tollway Authority lead the way in the new-issue market this week, which will see a slight uptick in activity.

This week, $5.7 billion of bonds are expected to be priced in the new-issue market, following the roughly $4.8 billion that sold in the abbreviated three-and-a-half sessions in which the market was open for business last week.

"I think one of the things you really saw in the market [last] week is the absence of liquidity," said Evan Rourke, portfolio manager at MD Sass. "The absence of the arbs and the hedge funds that provided that corrective bid or just the constant liquidity. So when you start bringing supply, how is the market going to digest $400 million or $500 million that has to come that day. I think it's going to be very interesting."

"I think munis could get cheaper, because you don't have liquidity in the market, so the market really doesn't have the ability to absorb supply," Rourke added. "Deals will come and they'll get done, but I think it's going to be a tricky little market for a while."

However, Matt Fabian, managing director at Municipal Market Advisors, said that "generally, the fears of supply are overrated." He said that one of the weaknesses of last week "was that the primary calendar wasn't bigger."

"Because the primary gives price discovery - and especially in the current market, where there is more intent to move the bonds to retail - you have a better ability to make money the closer to the actual sale your participation is," Fabian said. "So the primary should attract better bidders, and a bigger primary would be better for price trends."

In the week's largest scheduled transaction, UBS Securities LLC Wednesday will price $700 million of sales tax revenue bonds for the Utah Transit Authority. The bonds are slated to mature from 2018 through 2028, with term bonds in 2033 and 2038. The credit is rated Aa3 by Moody's Investors Service, AAA by Standard & Poor's, and AA by Fitch Ratings.

The UTA last sold sales tax revenue bonds in May 2007, when it refunded $261.1 million over two series, priced by Morgan Stanley. The larger series - $132.3 million of capital appreciation bonds - matures from 2018 through 2027, with yields ranging from 4.55% in 2018 to 5.05% in 2037. The smaller series - $128.8 million of current interest bonds - matures from 2016 through 2020, with term bonds in 2024, 2028, 2031, and 2035. Yields range from 3.98% in 2016 to 4.40% in 2035, all with 5% coupons. All the bonds are insured by MBIA Insurance Corp.

Among 5% coupon paper in the deal, bonds maturing in 2016 were tightest to that day's Municipal Market Data triple-A yield curve, with yields 14 basis points over the curve. Bonds maturing in 2035 were widest to the scale, with yields 18 basis points over.

Goldman, Sachs & Co. will price $697.2 million of revenue bonds and electric revenue refunding bonds for Energy Northwest. The bonds will mature from 2009 through 2024. Approximately $30 million of the bonds in the deal will be taxable. The public power utility is rated Aaa by Moody's and AA-minus by Standard & Poor's and Fitch.

Energy Northwest last sold electric revenue debt in March 2007. Goldman Sachs also priced that $280.1 million deal, in two series. Bonds from the larger $219 million series mature from 2013 through 2017, with yields ranging from 3.74% in 2013 through 3.88% in 2017, all with 5% coupons. Bonds from the smaller $61.1 million series mature from 2012 through 2018, with yields ranging from 3.71% in 2012 to 3.93% in 2018, all with 5% coupons.

Among 5% coupon paper in the deal, bonds maturing in 2012 were tightest to that day's MMD triple-A yield curve, with yields 18 basis points over the curve. Bonds maturing in 2015 were widest to the scale, with yields 20 basis points over.

JPMorgan tomorrow will price $600 million of federal highway grant anticipation revenue bonds for the Georgia State Road & Tollway Authority after a retail order period today. The bonds are slated to mature serially from 2009 through 2020. The credit is rated double-A minus by all three credit agencies.

The authority last sold grant anticipation revenue bonds in July 2006. Citi priced that $360 million deal, which matures from 2007 through 2018. Yields range from 3.74% with a 5% coupon in 2008 to 4.23% with a 5% coupon in 2018. Bonds maturing in 2007 were decided via sealed bid. Bonds maturing from 2010 through 2018 are insured by MBIA.

Among 5% coupon paper in the deal, bonds maturing in 2008 were tightest to that day's MMD triple-A yield curve, with yields seven basis points over the curve. Bonds maturing in 2012 and 2013 were widest to the scale, with yields 14 basis points over.

In other activity, Bear, Stearns & Co. will bring one of the week's largest deal's to market, as it will serve as lead manager on $337.1 million of joint revenue bonds for Dallas Fort Worth International Airport. The deal is slated to be priced Wednesday, 10 days after JPMorgan Chase & Co. bought Bear for $2 a share.

UBS tomorrow will price $243.4 million of revenue refunding bonds for the Greater Orlando Aviation Authority. The bonds are slated to mature from 2008 through 2018, and will be insured by Financial Security Assurance Inc. The underlying credit is rated Aa3 by Moody's, A-plus by Standard & Poor's, and AA-minus by Fitch.

The competitive slate is light this week.

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