Crowded market continues to pile on pricings; auction-rate conversions dominate headlines

By Cristal Cody and Sheri Kasprzak

New York, March 26 - Wednesday shaped up to be yet another active day for municipal pricings with at least a dozen offerings coming to market.

The day also provided a staggering number of upcoming issues to be priced in April, reiterating a sell-sider's assertion earlier this week that municipal investors are still hungry for bonds and issuers are still eager to sell.

Auction-rate bonds also continue to dominate municipals headlines, with more conversions announced Wednesday.

University of Texas bonds price

Pricing action Wednesday was led by a $150 million offering of series A permanent university fund flexible-rate notes from the Board of Regents of the University of Texas System.

The bonds (Aaa/AAA/AAA) were priced with a 1.48161% true interest cost from winning bidder Goldman, Sachs & Co. Eleven bids were made in the competitive sale.

The initial coupon is 2.5%, priced at par, and the coupon will be reset every 270 days.

The bonds are due May 15, 2030 and proceeds will be used to fund capital improvements.

In other pricings Wednesday, City of Industry, Calif., priced $77.54 million sales tax revenue bonds with a 4.648% true interest cost, according to pricing terms released Wednesday to Prospect News.

The series 2008 sales tax revenue bonds (A1/A+/-) priced Tuesday with coupons that ranged from 3% to 5% to yields from 2.7% to 4.99%.

The bonds have serial maturities from 2010 through 2027.

Stone & Youngberg was the successful bidder in the competitive sale.

Proceeds will be loaned to the Industry Urban Development Agency for redevelopment projects in the city.

OKC beats assumptions

Oklahoma City, Okla., priced $67.56 million general obligation and limited tax general obligation bonds with 4.33% to 5.4% true interest costs, the issuer said Wednesday.

The $60.56 million series 2008 general obligation bonds priced Tuesday with a 4.327% true interest cost, said Kenton Tsoodle, city finance business manager.

The bonds priced in a competitive sale with 4% to 5% coupons to yield 2.4% to 4.95%.

Merrill Lynch & Co. was the successful bidder.

The $7 million series 2008 limited tax general obligation bonds priced with a 5.401% true interest cost.

The bonds priced with 5% to 6% coupons to yield 3.5% to 6.07%.

Griffin, Kubik, Stephens & Thompson Inc. won the bidding.

Both series (Aa1/AA+/) have maturities from 2010 to 2028.

"Given the recent turbulent markets, we were very pleased with these rates," Tsoodle said. "They actually came in slightly below what our assumptions were."

The bonds are the first issue of $835.5 million authorization approved by voters in December.

Proceeds will be used for street, bridge and traffic-control systems, drainage control, park and recreational facilities, fire facilities, police facilities, transit facilities and economic development.

University Student Housing LLC priced $100.34 million student housing revenue bonds with a 2.2% initial weekly interest rate, a sell-side source said Wednesday.

The variable rate bonds (Aa2) priced Monday through the Chester County Industrial Development Authority for the student housing project at West Chester University of Pennsylvania.

Morgan Keegan & Co. managed the negotiated sale.

Proceeds will be used to build residence halls on the college campus.

More auction-rate conversions

In auction-rate conversions news, the Polk County Industrial Development Authority announced its plans to remarket and convert $70.7 million of revenue bonds to a daily interest rate, according to remarketing statements released Thursday.

The bonds were priced for Winter Haven Hospital in Florida.

The $27.95 million series 2005A and $27.95 million series 2005B revenue bonds will be converted on Thursday.

The bonds (/AA/) are due Sept. 1, 2034.

The $14.8 million series 2006 industrial development revenue bonds (-/AA/-) will be converted on Friday.

The bonds are due Sept. 1, 2036.

SunTrust Robinson Humphrey Inc. is the remarketing agent.

Illinois Finance Authority's reoffer

The Illinois Finance Authority plans to convert $86.1 million revenue bonds on April 9 and reoffer the bonds in a new series.

The series 2007A bonds for Edward Hospital & Health Services will be converted from an auction rate to a long-term interest rate, according to a preliminary reoffering circular released Tuesday.

After the conversion, the bonds will be reoffered as series 2008A bonds.

The series 2008A bonds (Aaa/AAA/-) are insured by Ambac Assurance Corp.

Citigroup Global Markets is the reoffering agent.

The St. Petersburg Health Facilities Authority intends to submit bids on $61.575 million auction-rate bonds at an interest rate of 2.33% to lower its exposure to auction rates.

The series 2007A health facilities revenue bonds priced for All Children's Hospital and mature Nov. 15, 2034.

The authority planned to begin the bids Wednesday and continue until all the bonds are purchased to establish the lowest possible auction interest rate, according to a notice.

Citigroup Global Markets is the broker.

Pricings set this week

Looking ahead to other pricings set for this week, the state of Florida intends to price $200 million public education capital outlay bonds in a competitive sale on Thursday.

The series 2006D full faith and credit State Board of Education bonds (Aa1/AAA/AA+) mature June 1, 2008 through June 1, 2037.

Florida sells bonds competitively with an 18-hour notice.

Proceeds will be used to finance capital outlay projects for the State System of Public Education.

Looking ahead, San Bernardino County in California said it intends to price $160.04 million in pension obligation refunding bonds on Monday.

The bonds (A2//) will be sold through lead manager Goldman, Sachs & Co. with UBS Investment Bank and Banc of America Securities as the co-managers.

The county will use the proceeds to refund its series 2004B pension obligation bonds, one of the many auction-rate securities the county currently has.

Moody's Investors Service recently pointed out that the county has $2 billion in auction-rate securities, but that is being worked out, according to the county source.

"We're aware of the auction-rate situation and we're working to refund those bonds," she said. "These bonds are a part of that."

April pricings

Moving back to the slate of offerings announced Wednesday for pricing in April, the city of Portland, Ore. confirmed it will sell $554.12 million in series 2008A and 2008B first lien sewer system refunding and revenue bonds on April 3, the issuer confirmed.

The bonds (Aa3/AA-/) will be sold competitively and will include $339.89 million in series 2008A bonds and $214.23 million in series 2008B bonds.

The series 2008A bonds are due from June 15, 2009 to June 15, 2023 and carry a maximum true interest cost and coupon of 6%. The bonds may have term bonds, but the maturities for those have not been set at this time.

The series 2008B bonds are also due from June 15, 2009 to June 15, 2023 and also carry a maximum TIC and coupon of 6%.

Proceeds will be used for improvements to the city's sewer system, for the refunding of the city's series 1998A bonds, for the refunding of series 2003B second lien sewer system revenue bonds and for making a contribution to a reserve account.

Chicago to bring $553.69 million

Chicago plans to price $553.69 million second lien water revenue project and refunding bonds on April 2, a source said Wednesday.

Maturities have not been set yet for the series 2008 bonds.

UBS Investment Bank is the senior manager.

Proceeds will be used to fund extensions to the water system and to refund a portion of the city's outstanding water revenue bonds and commercial paper notes.

In other upcoming sales, Middlebury College in Vermont plans to price $55.26 million bonds on April 1, the issuer said Wednesday.

The series 2008 bonds (Aa2/VMIG 1) will price through the Vermont Educational and Health Buildings Financing Agency.

The bonds are due Nov. 1, 2026, said Derek Hammel, manager of treasury and finance for the college.

Goldman, Sachs & Co. is the underwriter.

Proceeds will be used to refund the college's outstanding series 2006B auction rate bonds.

Hidalgo County Drainage District No. 1 in Texas expects to price $72 million unlimited tax improvement bonds in a competitive sale on April 1, according to a sale notice.

The series 2008 bonds have serial maturities from 2010 through 2028.

Proceeds will be used for drainage improvements and to acquire the rights-of-way.

Clark University in Massachusetts plans to price $50.3 million variable rate bonds next week, the issuer said Wednesday.

The series 2008 bonds (Aaa) will price in a weekly mode, said James Collins, executive vice president and treasurer of the university.

"We'll try to get the pricing out in the Street early next week," he said.

The bonds will price through the Massachusetts Development Finance Agency.

UBS Investment Bank will manage the negotiated sale.

Proceeds will be used to refund series 2000, 2002A and 2002B bonds, pay the termination fee on a swap for the series 2002A bonds and fund renovations of the Goddard Library.

Roseville, Calif., and the South Placer Wastewater Authority plan to price $165.85 million variable rate demand refunding wastewater revenue bonds on April 9, said Monty Hanks, the city's investment analyst.

The $73 million series 2008A bonds and the $92.85 million series 2008B bonds will bear a weekly interest rate.

Morgan Stanley & Co. is the remarketing agent.

Proceeds will be used to refund series 2003 auction rate bonds and series 2000A and 2000B revenue bonds.

Dallas-Fort Worth bonds

In other news, Dallas-Fort Worth International Airport had been slated to price $337.075 million in bonds on a negotiated basis Wednesday, but calls to the airport were not returned for full terms by press time.

In other airport news, the San Francisco Airport was set to price $261 million in AMT and non-AMT bonds (A1/A/) Wednesday. The airport authority did not respond to calls for additional information.

The bonds were expected to have a structure from 2010 to 2022.

Citigroup Global Markets was the lead manager for the negotiated offering and proceeds will be used to refund existing bonds.

Elsewhere, the Hackensack University Medical Center was expected to price $241.285 million in bonds through lead manager Bear, Stearns & Co., but the terms could not be determined by press time Wednesday.

The Utah Transit Authority priced $700 million sales tax revenue bonds on Wednesday.

The series 2008A bonds (Aa3/AAA/AA) have serial maturities from 2018 through 2028 and term bonds due 2033 and 2038.

UBS Investment Bank is the senior manager.

Proceeds will be used to finance the acquisition and construction of system improvements.

The pricing terms are expected to be available on Thursday, according to a spokesman.

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