Auction-rate bonds get reset; University of Texas prices $685.485 million bonds at 2.3% initial rate

By Cristal Cody and Sheri Kasprzak

New York, March 17 - Auction-rate securities were still in the news Monday, with yet more issuers announcing resets or opening bids for the whole of their auction-rate bonds.

Heading up the redemption action, the Massachusetts Health and Educational Facilities Authority said it expects to redeem $51.15 million in period auction reset securities on April 1.

The series 2004 B auction revenue bonds were priced for the Southcoast Hospitals Group.

Elsewhere, the St. Petersburg Health Facilities Authority in Florida will seek to buy back the remainder of its 2007A health facilities revenue bonds at the next auction, according to a notice released Monday.

The $61.575 million in bonds is for the Children's Hospital, Inc. obligated group project.

The issuer will submit bids for the upcoming auction on March 19.

"The borrower intends to bid an interest rate equal to or greater than the current Sifma Municipal Swap Index," said the notice.

"The borrower presently intends to submit hold orders in auctions with respect to the series 2007A bonds."

The maximum rate on the bonds is 15%.

Issuers also continue to opt for refunding bonds and pricing new issues as alternatives to get out of the auction rate market.

The board of trustees at Grand Valley State University will bring $148.68 million in general revenue refunding bonds on April 1, the issuer said Monday.

The university intends to price $103.68 million series 2008A and $45 million series 2008B bonds, said Brian Copeland, the university's assistant vice president for business and finance.

Series 2008A fixed-rate bonds (/AAA/) are insured by Financial Security Assurance.

The bonds have serial maturities from Dec. 1, 2008 through Dec. 1, 2023, with term bonds due 2028 and 2033.

The series 2008B variable-rate bonds of $45 million also are expected to be insured by FSA, Copeland said.

NatCity Investments Inc. is the underwriter for the negotiated sale.

Proceeds will be used on April 1 to refund the outstanding principal of series 2001B bonds, 2002 bonds, 2003 bonds, 2004 bonds and 2007 bonds.

University of Texas prices bonds

In scant pricing activity on Monday, the Board of Regents of the University of Texas System priced $685.485 million in series 2008B public higher education revenue bonds, said Terry Hull, the university system's director of finance.

The initial rate is 2.3%, Hull said, and the bonds will reset weekly.

The term bonds (Aaa/AAA/) are due 2016, 2025, 2032 and 2039, and were sold on a negotiated basis.

Hull told Prospect News that the securities are not auction rate and that was deliberate.

"We're a pretty efficient borrower and we can get a good weekly rate because of our credit rating," Hull said.

Lehman Brothers and JPMorgan Chase & Co. were the lead managers.

Proceeds will refinance the university's $462 million in outstanding certificates of participation and refund $35 million in outstanding bonds. The rest will be used for $182 million in campus improvements.

Elsewhere in pricing news, the Mississippi Business Finance Corp. was expected to price $77.24 million in variable-rate demand revenue bonds Monday.

The series 2008 bonds (A1/VMIG1) were sold on behalf of the Renaissance at Colony Park project.

Morgan Keegan & Co. was the underwriter for the negotiated offering.

The pricing terms were not immediately available.

Indiana Finance Authority bonds coming up

Looking to upcoming offerings, the Indiana Finance Authority will price $178.87 million in lease revenue bonds (Aa3/AA/AA) on either March 18 or 19, said Dan Kramer, the director of debt management for the authority.

"We anticipate March 18 or 19, but [it's] subject to market conditions," Kramer said Monday morning.

The offering includes $127.29 million in series 2008A-1 and 2008A-2 lease revenue refunding bonds and $51.58 million in series 2008B lease revenue refunding bonds.

The 2008A-1 bonds are due from 2011 to 2018. The maturities for the 2008A-2 bonds have not been set.

The 2008B bonds are due 2008 to 2011.

The bonds will be sold on a negotiated basis through lead manager Morgan Stanley.

Proceeds from the sale will be used to refund the authority's outstanding series 2004A, 2004B and 2004C bonds.

Hamilton County plans G.O., refunding bonds

Looking ahead to the end of the month, Hamilton County, Tenn., plans to price $133.985 million bonds in a competitive sale on March 25, according to a notice released Monday.

The county will price $97 million general obligation bonds in series 2008A, and $36.985 million general obligation refunding bonds in series 2008B.

Series 2008A bonds have serial maturities from 2009 through 2023. Series 2008B bonds have maturities from 2009 through 2015.

Public Financial Management is the financial advisor for the sale of the bonds (Aa1//AA+).

Proceeds will permanently finance a portion of the county's outstanding commercial paper notes; refund a portion of outstanding series 1997A, 1998A, and 2000 general obligation bonds and fund government and school capital improvement projects.

That same week, Newport News, Va., intends to price $58.515 million bonds on March 26, according to a preliminary official statement released Monday.

The city plans to sell $33.135 million series 2008 A general obligation general improvement bonds and $25.38 million series 2008 B general obligation water bonds.

The bonds (Aa2/AA/) will price competitively.

Series 2008 A bonds have serial maturities from 2011 through 2028. Series 2008 B bonds have maturities from 2009 through 2028.

Public Financial Management is the financial advisor.

Proceeds will be used for improvement projects for public buildings, schools, streets, parks and extensions to the city's water system.

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