Munis stay put as California brings upsized $2.5 billion sale of G.O. bonds; Seattle prices

By Sheri Kasprzak

New York, March 11 - Municipals were largely unmoved on Thursday as a flurry of primary activity dominated the day's activity. Primary offerings were led by a massive $2.5 billion offering of various-purpose general obligation bonds from the State of California.

California's offering was upsized from the planned $2 billion size, and the majority of the bonds were snapped up by retail investors, said a sellsider close the deal.

"We're very happy with the way it went," the sellsider said.

"The fact that it sized up, the fact that retail came out in droves to buy, I think it really says a lot about appetite for California bonds, especially among retail investors. It's not the best-rated issuer out there, and [the state] has its share of problems, but pricing came fair, if you ask me. I can't speak for how the state feels about it, but I think they managed to get very good pricing, all things considered."

The bonds (Baa1/A-/BBB) were sold through senior managers J.P. Morgan Securities Inc. and Morgan Stanley & Co. Inc.

The bonds are due 2011 to 2030 with term bonds due 2033, 2036 and 2040. Coupons on the bonds, said the sellsider, ranged from 2% to 5.5% and yields ranged from 1.17% to 5.68%.

The state is expected to use the proceeds to refund existing commercial paper and fund a variety of capital projects.

Seattle prices $201.43 million

In other pricing news, the City of Seattle priced $201.425 million in series 2010 revenue bonds Thursday, said a pricing sheet.

The sale included $58.235 million in series 2010A taxable Build America Bonds and $143.19 million in series 2010B tax-exempt bonds.

The bonds were sold competitively. Citigroup Global Markets Inc. took the Build America Bonds, and Bank of America Merrill Lynch bought the tax-exempts.

The 2010A bonds are due 2018 to 2030 with 4.03% to 5.23% coupons, and all but the 2027 bonds priced at par. The 2010B bonds are due 2010 to 2031 with 2.5% to 5% coupons.

Proceeds will be used to fund capital expenditures and refund existing debt.

JEA sells $64.25 million

Elsewhere, JEA of Jacksonville, Fla., sold $64.245 million in series 2010A electric system revenue bonds, said a pricing sheet.

The bonds were sold in two tranches: $32.835 million in series 2010A-1 bonds and $31.41 million in series 2010A-2 bonds.

The bonds were sold through senior manager Citigroup.

The 2010A-1 bonds are due 2012 to 2030 with coupons from 2% to 4.5%. The 2010A-2 bonds are due 2012 to 2020 with coupons from 3% to 4%.

Proceeds will be used to refund some of JEA's outstanding electric system revenue bonds.

MTA to price $500 million

Looking out on the horizon, the Metropolitan Transportation Authority of New York City is set to sell $500 million in series 2010 dedicated tax fund bonds, said a preliminary official statement.

The sale will be conducted in two tranches, including a tranche of Build America Bonds, but the exact breakdown was not available Thursday.

The bonds will be sold through JPMorgan and Ramirez & Co. Inc.

Proceeds will be used to fund commuter projects.

Massachusetts HEFA plans sale

Also in the Northeast, the Massachusetts Health and Educational Facilities Authority plans to price $325.435 million in series 2010 revenue bonds on behalf of Northeastern University, according to a preliminary official statement.

The offering includes $251.425 million in series 2010A bonds and $74.01 million in series 2010B Build America Bonds.

The bonds (A2) will be sold on a negotiated basis with Barclays Capital Inc. as the lead manager.

The 2010A bonds are due 2010 to 2030 with a term bond due 2035. The 2010B bonds are due 2015, 2020, 2030 and 2035.

Proceeds from the sale will be used to refund existing bonds and terminate a swap agreement connected to the refunded bonds.

D.C. to price bonds for NPR

In other upcoming deals, the District of Columbia is set to price $160 million in series 2010 revenue bonds for National Public Radio, said a preliminary official statement.

The bonds (Aa3/AA-/) will be sold on a negotiated basis with Morgan Stanley & Co. Inc. as the lead manager.

The bonds will be offered in two tranches, but the exact breakdown of those tranches is not currently available.

D.C. will use the proceeds to fund a loan to NPR to renovate, construct, equip and upgrade NPR's facilities in Washington, D.C.

Virgin Islands deal planned

Also out on the horizon, the Virgin Islands Water and Power Authority is set to price $78.18 million in series 2010 electric system revenue bonds, said a preliminary official statement.

The bonds (Baa2/BBB-/BBB) will be sold through lead managers Rice Financial Products Co. and Citigroup.

The sale includes $39.985 million in series 2010A tax-exempt refunding bonds, $9.185 million in series 2010B tax-exempt revenue bonds and $29.01 million in series 2010C Build America Bonds.

Proceeds will be used to refund the authority's series 1998 bonds and to fund capital expenditures previously funded by draws on a temporary line of credit.

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