(Bloomberg) – Columbus, Ohio, the capital whose borrowings are rated one level above the state’s, sold about $430 million in AAA debt that included more than $266 million in Build America Bonds, the week’s second largest such offer.

Ten-year general obligations were priced to yield 3.4 percent, according to a person familiar with the deal, which is 25 basis points higher than $325 million in bonds issued earlier this month by comparably rated Montgomery County, Maryland. A basis point is 0.01 percentage point.

Columbus may have paid a premium because the largest sections of the five-portion deal may not qualify for inclusion in indexes, said Anthony Shields, a principal in the public- finance department at Williams Capital Group in New York.

“Because there are so many parts, there’s no benchmark, and that actually hurts the deal rather than helps them,” Shields said. “A lot of people who buy the BABs want to buy the bonds that are in an index,” he said, referring to the Build America segment.

The Build America Bond program, under which the federal government pays 35 percent of the interest costs of taxable bonds sold to pay for public works projects, was created last year as part of President Barack Obama’s economic-stimulus package to help ease borrowing by state and local governments. The program was set to expire at the end of 2010, but a bill was introduced yesterday in the U.S. House to extend it two years.

“We’ll probably end up close to a 50/50 split between tax- exempts and taxables,” said Steve Wentzel, Columbus’s debt management specialist. Final pricing information won’t be available until today.

Municipal Boon

Build Americas have been a boon for state and local governments, which have sold about $124 billion of the securities. They also have been a plus for investors, according to Justin Hoogendoorn, a bond strategist at BMO Capital Markets in Chicago.

“What we’re telling clients is that BABs and the broader municipal market in general are very favorable compared with corporates right now,” Hoogendoorn said. “Ohio paper is definitely pricing wider than the overall market, but with Columbus, I wouldn’t expect them to have too many problems with pricing on the deal.”

This month, top-rated taxable municipal securities have returned more than triple the rate of comparable corporate bonds, according to indexes compiled by Bank of America Corp.’s Merrill Lynch & Co.

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(Bloomberg) – Illinois’s Cook County, home of Chicago, the third most-populous U.S. city, will sell $1.05 billion in debt including its largest Build America Bond offering, as municipal issuance rebounds from a two-month low.

Cook County’s securities lead more than $8.9 billion in sales set for this week, almost double the prior period, according to data compiled by Bloomberg. The deal comes after stocks fell and Treasuries rose a second straight trading day on lower-than-forecast job growth and as technology shares sank.

The $2.8 trillion municipal bond market “remains at the top end of the risk spectrum,” said Justin Hoogendoorn, a managing director in the BMO Capital Markets Fixed-Income Group. “It works for most investors looking to get fixed-income exposure.”

Ten-year Treasury rates declined 6 basis points, or 0.06 percentage point, today to about 3.15 percent, according to BGCantor Market Data. Yields on top-rated, 10-year tax-exempt general obligations were unchanged after falling 2 basis points to 3.12 percent on June 4, data from Concord, Massachusetts- based Municipal Market Advisors showed.

Demand for Cook County’s debt, especially $308.6 million in taxable Build America Bonds, should get a boost from its link with a recognized name like Chicago, said Hoogendorn, who’s based in the city. The county will also sell $23.3 million in traditional taxable debt, according to Deniece Jordan-Walker, managing director of Gardner, Underwood & Bacon LLC, the financial adviser on the deal.

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(PRNewswire-FirstCall) – Members of the media are invited to join a conference call and webcast on April 15th at 10a.m. with Justin Hoogendoorn, Managing Director for BMO Capital Markets’ U.S. Fixed Income Group, and Dimitri Delis, Ph.D, Director for BMO Capital Markets’ U.S. Fixed Income Group, to discuss their quarterly perspective on fixed income.

During the conference call, Mr. Delis will address:
– Outlook for the U.S. economy
– The housing market and its impact on consumer spending
– Debt, deleveraging and inflation
– Future monetary policy actions

Mr. Hoogendoorn will discuss fixed income sector performances and analyze what markets could look like through the November elections and beyond. In the search for relative value, he will also address:
– Relative Q1 2010 fixed income performances
– The future of BABs
– Strategic positioning and relative value opportunities in mortgages,
agencies, and municipal bonds

“From the first anniversary of Build America Bonds (BABs) to the brand new health care initiative to first quarter market performances, the post-crisis world focuses on firsts. The Fed understands this infant world is stable, yet incredibly fragile, and will do whatever it takes to successfully navigate into 2011,” said Mr. Hoogendoorn.

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