Sellsider says tone of market is improved; Sacramento Suburban Water District prices $75.25 million COPs

By Cristal Cody and Sheri Kasprzak

New York, May 12 - Market conditions improved on Monday, said one market insider.

"Things are a touch better, from what I've heard," he said. "We're looking better than last week. I think a lot of issuers are more eager to get out there."

Meanwhile, issuers are gearing up to price a big slate of offerings this week.

Monday's pricing activity was light, led by a $75.25 million sale of certificates of participation from the Sacramento Suburban Water District in California. The sale marked the district's official move out of the auction-rate market after it priced $75.25 million COPs with 2.05% initial weekly adjustable rates and converted $41.275 million auction-rate certificates on Monday, the issuer told Prospect News.

Proceeds from the $37.625 million series 2008A1 and $37.625 million series 2008A2 refunding COPs (A1//) will be used to refund the district's outstanding series 2005A adjustable-rate revenue certificates.

The district also remarketed the series 2004 COPs (A1//), director of finance Dan Bills said.

"It's tremendous that we were able to roll out of the ARS market and into the VRDO market and do it so smoothly," he said. "The rates have dropped dramatically for us."

The district had auction-rate bonds that had gone as high as 10% on the interest rate, he said.

Sisters of St. Francis prices bonds

In other pricing news, the Sisters of St. Francis Health Services in Indiana priced $162.96 million in variable-rate demand bonds Monday, the issuer's bond counsel said.

The bonds (Aa3//) include $81.66 million in series 2008A and $81.3 million in series 2008B bonds. The bonds are due Nov. 1, 2041.

The initial coupon is 2.1%, David Nie of Ice Miller said. The rate will reset on a weekly basis.

The bonds will be sold through the Indiana Finance Authority.

Series 2008A bonds were sold via lead manager Merrill Lynch, and the 2008B were sold via Citigroup Global Markets.

Proceeds will be used to refund prior debt.

Grossmont-Cuyamaca bonds

In this week's upcoming pricings, the Grossmont-Cuyamaca Community College District in California intends to price $190 million in bonds Wednesday, a calendar of upcoming offerings said Monday.

The bonds (Aa3/AA-/) will be sold on a negotiated basis with Citigroup Global Markets as the lead manager.

The full details of the sale were not immediately available.

On Tuesday, Charlotte, N.C., announced plans to price $184 million in series 2008 general obligation refunding bonds, a calendar said.

The bonds (//AAA) will be sold on a negotiated basis with Wachovia Bank as the lead manager.

The city plans to use the proceeds to refund its series 1998 and 1999 G.O. bonds. The refunding is expected to provide a cash-flow savings of $17 million, according to a report released Monday by Fitch Ratings.

Katy ISD bonds to sell

In other news this week, the Katy Independent School District in Texas plans to price $100 million in unlimited tax school building bonds, a calendar of upcoming deals said.

The bonds are set to price this week, but the exact pricing date could not be determined by press time.

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

Proceeds will be used to construct, equip and acquire two new elementary schools and a junior high school, which are scheduled for completion in August.

Iowa Health prices $150 million

Looking a little farther ahead, the Iowa Health System plans to sell $150 million in series 2008A variable-rate demand health facilities revenue bonds on May 20, the issuer confirmed Monday.

The bonds (Aa3//AA-) will be sold on a negotiated basis with Citigroup Global Markets as the lead manager. The bonds will be sold through the Iowa Finance Authority.

The sale includes $75 million in series 2008A-1 bonds and $75 million in 2008A-2 bonds.

Proceeds from the 2008A-1 bonds will be used to construct a 95-bed community hospital in West Des Moines. The rest will be used to finance expansion and renovation projects in other cities, as well as replace FGIC as the bond insurer on its series 2005A bonds with Assured Guaranty.

WGBH Educational Foundation's bonds

Also looking ahead, the Massachusetts Development Finance Agency expects to price $134.75 million revenue bonds for the WGBH Educational Foundation on May 21, the issuer said Monday.

The $107.25 million series 2008A current interest bonds and $27.5 million series 2008B zero-coupon bonds also will be offered for retail orders on May 20, said Adam Bickelman, spokesman for the finance agency.

RBC Capital Markets is the senior manager of the negotiated sale.

Proceeds will be used to pay swap termination fees and to refund the foundation's series 2007A, series 2006A, series 2005A and series 2002B variable-rate demand revenue bonds.

WGBH is expected to hold an investors conference call later this week.

The Kentucky Higher Education Student Loan Corp. is expected to price $300 million variable-rate demand revenue and refunding bonds on May 28, according to a sale calendar.

The series 2008A-1 tax exempt and A-2 taxable bonds will be sold in a negotiated sale managed by Bank of America.

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