California to sell up to $7 billion RANs; Hennepin County of Minnesota to price $97.45 million

By Cristal Cody

New York, Oct. 3 - Some issuers responded to the federal adoption Friday of the $700 billion financial economy recovery plan by setting a pricing date for new offerings, and investors should begin to respond, a sellside source told Prospect News.

"After things get worked out, the market will return to a sense of normalcy. Whatever that future normal will look like, I don't know but there's pent-up demand and issuers are ready to borrow," the sellsider said.

After the recovery plan's passage, California announced plans to price up to $7 billion in revenue anticipation notes the week of Oct. 13, the state treasurer's office said Friday.

However, given the "turbulent market conditions," the state may sell only $3 billion to $4 billion of the notes, said treasurer Bill Lockyer.

"Hopefully, enactment of the economic recovery plan will end the paralysis in credit markets and allow the state to conduct the RAN transaction," Lockyer said in a statement. "But there are no guarantees the legislation will produce the market conditions that will permit completion of a RAN deal at the best price for taxpayers."

The notes will price through a negotiated sale managed by Banc of America Securities and Goldman, Sachs & Co.

Proceeds will be used to meet the state's short-term cash needs.

States face difficulty in holding bond sales

California reportedly will be out of cash reserves by the end of the month unless it can complete the sale.

State governor Arnold Schwarzenegger said in a letter sent Thursday to the U.S. Department of the Treasury that many states and local governments have not been able to secure financing for bond offerings and for routine cash flow needs.

"Absent a clear resolution to this financial crisis that restores confidence and liquidity to the credit markets, California and other states may be unable to obtain the necessary level of financing to maintain government operations and may be forced to turn to the Federal Treasury for short-term financing," he said.

Hennepin County to price $97.45 million

Coming up in new offerings, Hennepin County in Minnesota plans to price $97.445 million in general obligation bonds, capital notes and certificates of participation through competitive sales on Wednesday, according to sale notices released Friday.

The sale includes $63.51 million series 2008D G.O. bonds with serial maturities from 2009 through 2028; $15 million series 2008E G.O. capital notes with serial maturities from 2009 through 2017 and $18.935 million series 2008F lease revenue refunding COPs with serial maturities from 2009 through 2015.

Public Financial Management is the county's financial adviser.

Proceeds will be used for library improvements, various capital improvements and costs of capital equipment.

The proceeds also will be used to defease obligations under the lease and purchase option agreement between Center Hospital and the county and to redeem the series 1998 lease revenue refunding COPs' serial maturities from 2009 through 2015, which are callable on Nov. 15, and the series 1998B G.O. bonds' serial maturities from 2009 through 2019, which are callable on Dec. 1.

Bossier City, La., to price $125 million

Also on the horizon, Bossier City, La., intends to price $125 million utilities revenue bonds, according to a preliminary official statement released Friday.

The series 2008 bonds (A3/AA-/) have serial maturities from 2009 through 2028 with terms due 2028 and 2033.

Merrill Lynch & Co. is the senior manager of the negotiated sale.

Proceeds will be used to make additions, improvements, extensions and repairs to the waterworks plant and the sewer utility system and to fund a debt service reserve fund.

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