California Health prices $147.88 million bonds for Adventist; market continues firming trend

By Aaron Hochman-Zimmerman and Sheri Kasprzak

New York, May 15 - As the week came to a close, the municipals market continued its trend of firming but was mostly unchanged on Friday.

"We're looking a little firmer, but mostly unmoved," one trader noted.

Even though one trader thought the week was fairly quiet, it was punctuated by a $1 billion sale from the State of Illinois.

"It was a pretty quiet week," the trader said, adding that the $453.775 million sale of bonds from the City of San Diego "did well."

The San Diego bonds priced with yields from 0.64% to 5.43%.

In the coming days, the volume looks to improve.

"The calendar is pretty big for next week," he said.

"There is a fair amount of appetite, particularly for the Build America Bonds. It doesn't seem like it can get enough of those."

Meanwhile, on the trading side, it has been very quiet, the trader said.

Perhaps in sympathy with equities, though, retail is just not involved, the trader said.

MBIA gets hit with suit

Elsewhere, the market was hit by a lawsuit during the week. A group of investors filed suit against bond insurance company MBIA Inc. over a transaction that split its business into separate units for municipal policies and for structured obligations.

"The split allowed MBIA to create a more stable public-finance only guarantor, National, but left policyholders on mortgage bonds and CDOs with less security backing their policies," a sellsider said.

"It's challenging to handicap the probability of success of this lawsuit - which includes Bank of America, Merrill Lynch, J.P. Morgan and UBS as the major complainants - as the case will involve complex legal issues surrounding both implicit and explicit warranties. Still, the lawsuit could serve to delay any ratings upgrades of the National subsidiary, as the ratings agencies will likely view the uncertain outcome of the suits as a source of additional risk for the insurer."

California Health sells

Looking to very light primary action for Friday, the California Health Facilities Financing Authority priced $147.875 million in series 2009 revenue bonds for Adventist Health Care, said a sellside source familiar with the deal.

The sale included $90 million in series 2009A revenue bonds sold through Goldman, Sachs & Co. and $57.875 million in series 2009C revenue bonds sold through J.P. Morgan Securities Inc.

The 2009A bonds are due Sept. 1, 2039 with a 5.75% coupon, priced at par.

The 2009C bonds are due 2010 to 2021 with 4.625% to 5.25% coupons and yields from 2.43% to 5.42%.

Proceeds will be used for hospital projects for Adventist Health Care.

In reoffering news, the 5.125% 2020 series C bonds were reoffered at 5.02% Friday afternoon. The 5.75% 2039 series A bonds were reoffered at 5.4576%.

California's Kaiser sale

Thursday will bring the biggest offering of the week - a $1.6 billion sale of series 2009 revenue bonds from the California Statewide Communities Development Authority for Kaisier Health Systems.

The sale includes $750 million in series 2009A bonds and $850 million in series 2009B bonds.

The bonds (/A+/A+) will be sold on a negotiated basis with Citigroup Global Markets Inc. and JPMorgan.

Proceeds will be used to renovate, construct, acquire and equip Kaiser hospitals and reimburse Kaiser for equipment acquisitions and capital expenses.

NYC's G.O. deal

Another big deal comes to market on Wednesday. The City of New York is scheduled then to price $790 million in series 2009J general obligation bonds, said a preliminary official statement.

The sale includes $600 million in series 2009J-1 bonds and $190 million in series 2009J-2 bonds.

Merrill Lynch & Co. Inc. is the senior manager for the sale.

The bonds are due 2011 to 2036.

Proceeds will be used to pay for capital expenses.

Massachusetts sale ahead

Also on Wednesday, the Commonwealth of Massachusetts is scheduled to bring to market $621.43 million in series 2009 G.O. bonds on Wednesday, said a preliminary official statement released Friday.

The sale includes $300 million in series 2009B bonds, $250 million in series 2009C bonds and $71.43 million in series 2009D bonds.

The bonds will be sold on a negotiated basis with Fidelity Capital Markets Inc. as the senior manager.

The 2009B bonds are due 2010 to 2029 with term bonds due 2034 and 2038. The 2009C bonds are due 2010 to 2038, and the 2009D bonds are due 2010 to 2016.

Proceeds will be used to fund capital projects.

Ohio plans $231 million

On Tuesday, the State of Ohio is scheduled to bring $231.665 million in series 2009 G.O. refunding bonds, according to a preliminary official statement.

The sale includes $49.025 million in series 2009B higher education G.O. refunding bonds, $101.835 million in series 2009B common schools G.O. refunding bonds and $80.805 million in series 2009B infrastructure improvement G.O. refunding bonds.

The bonds (Aa1/AA+/AA+) will be sold on a negotiated basis with Merrill Lynch and Fifth Third Securities Inc. as the senior managers.

The bonds are due 2012 to 2020.

Proceeds will be used to refund existing debt.

Elsewhere during the week, the Virginia Public Building Authority is scheduled to price $318 million in series 2009 revenue bonds on Wednesday, said a calendar of upcoming offerings.

The bonds (Aa1/AA+/AA+) will be sold through senior manager BB&T Capital Markets Inc.

The bonds are due 2010 to 2029.

Proceeds will be used to make repairs to infrastructure and refund existing debt.

Geisinger Health sale

In other pricing news, the Geisinger Authority of Pennsylvania is set to price $115 million in series 2009A health system revenue bonds for the Geisinger Health System on Wednesday, said a sales calendar.

The bonds (Aa1/AA/) will be sold through lead manager JPMorgan.

The bonds are due 2019 to 2023 with term bonds due 2037 and 2039.

Proceeds will be used to make loans to the Geisinger obligated group and its affiliates as well as fund the purchase price of 2007 bonds tendered for purchase by their owners.

Geisinger is based in Danville, Pa.

Tuesday will bring the sale of $77.39 million in series 2009 general improvement bonds from the City of Memphis, according to a preliminary official statement.

The bonds will be sold competitively with First Southwest Co. and ComCap Advisors as the financial advisers.

The bonds are due 2012 to 2029.

Proceeds will be used to retire commercial paper.

Secondary market

In the secondary market on Friday, the tone remained firm, but traders said municipals were basically unchanged.

During the course of the week, the market steadily firmed each day.

Moving to specific trades, the Hospital Authority of Clackamas County in Oregon saw its recently priced series 2009A revenue bonds for Legacy Health System moving. The 5.5% 2029 bonds were seen at 5.274% Friday after pricing Thursday at 5.55%. The 4.5% 2018 bonds were seen at 4.375% after pricing at 4.59%, and the 5% 2019 bonds were seen moving at 4.575% after pricing at 4.79%. The 5.125% 2023 bonds were trading at 5.22% Friday after pricing at 5.24%.

Elsewhere, the North Carolina Capital Facilities Finance Commission's Wake Forest University bonds were seen in action Friday. The 4.25% 2027 bonds were seen at 4.122%. The 4.5% 2039s were seen at 4.371%.

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