Muni volume off; interest up for insured maturities; Alabama Authority to sell $181.42 million

By Cristal Cody

Tupelo, Miss., April 9 - New municipal bond offerings were announced on Friday, but the primary market remains low, according to one source.

"This week, municipal volume is very low," a source told Prospect News. "Primary market issuance was very low.

"One of the largest issues this week was the California water issue, and another pretty sizable one was the City of Philadelphia issue. These are good-sized issues, but these aren't the barn-burner issues that lead the market - but they are this week because volume is so low."

On Thursday, the Irvine Water Ranch District Joint Power Agency in California brought $436 million of tax-exempt revenue bonds and Philadelphia priced $395 million in water and wastewater revenue refunding bonds.

Coming up, the Alabama Public School and College Authority is expected to sell $181.42 million in refunding bonds via two sales, according to a notice of sale.

Philadelphia insured bonds pique interest

Philadelphia's bonds priced to strong retail and institutional demand and saw high interest in certain insured maturities, according to a source.

The series 2010 bonds (A3//A-) priced with 2.5% to 5% coupons to yield 1.79% to 4.11%.

The bonds have serial maturities from 2010 through 2019.

The offering included some maturities insured by Assured Guaranty Municipal Corp., one source said. The insurance protects investors against default, but the market for insured bonds had fallen out in 2007 and is slowly returning.

The deal featured insurance on parts of the 2013, 2016, 2017, 2018 and 2019 maturities, the source said.

The uninsured 2019 maturity priced with a 5% coupon to yield 4.11%. The insured 2019 maturity priced with a 5% coupon to yield 3.96%, according to the source.

"There was a very high level of interest in the insured bonds from both retail and institutional buyers," the source said. "Where there is availability, we are seeing value for both retail and institutional buyers to buy insurance."

Morgan Stanley & Co. Inc. was the senior manager of the negotiated sale.

The proceeds will be used to refund the outstanding series 2003 variable-rate bonds and pay costs associated with terminating a fixed payer swap agreement to Citigroup Inc.

Alabama School Authority to price

Looking ahead, the Alabama Public School and College Authority expect to sell $181.42 million in refunding bonds via two sales, according to a notice of sale.

The authority intends to price $110.21 million in series 2010A capital improvement refunding bonds with serial maturities from 2015 through 2019.

In addition, the authority plans to sell $71.21 million in series 2010B capital improvement refunding bonds, according to a notice of sale.

The series 2010A bonds will be purchased by underwriters Morgan Stanley, Frazer Lanier Co. Inc., Joe Jolly & Co., Inc. and Securities Capital Corp.

The series 2010B bonds, due in 2013 and 2014, are expected to price on Wednesdays via a competitive sale, according to the notice.

Public FA, Inc. is the authority's financial adviser.

The proceeds will be used to refund the outstanding series 2001C capital improvement bonds as well as the series 1998 capital improvement bonds maturing in 2018 and the series 2009A refunding bonds maturing in 2029.

The authority is a public corporation of the State of Alabama.

Florence, S.C., to sell

Also on the horizon, the City of Florence, S.C., plans to sell $98.5 million in revenue and refunding revenue bonds, according to official notices of sale.

The sale includes $29.9 million in series 2010A combined waterworks and sewerage system refunding revenue bonds, which have serial maturities from 2010 through 2024.

In addition, the city expects to price $68.6 million in series 2010B combined waterworks and sewerage system capital improvement revenue bonds. The bonds have serial maturities from 2025 through 2039.

The sale of the series 2010B bonds includes alternative bidding on the offering, either structured as tax-exempt bonds or taxable Build America Bonds, according to the notice.

The bonds (A1/A+/) will price via a competitive sale on April 20.

Independent Financial Advisors is the financial adviser for the sale.

Proceeds will be used to defease the series 1993 South Carolina Pollution Control revolving fund loan and the series 2000 waterworks and sewerage system revenue bonds and to defray the costs of capital improvements to the waterworks and sewerage system.

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