Schools continue to bring building bonds; New York's MTA releases terms on $1 billion revenue bonds;

By Cristal Cody and Sheri Kasprzak

New York, Feb. 13 - Pricing action eased in the municipal market on Wednesday after Tuesday's onslaught, but that doesn't mean the market is backing down, a market source told Prospect News.

"It's a healthy market," he said. "Lots of issuers eager to price."

When asked about a slate of unlimited tax school building bonds either priced recently or coming up in the pipeline, the market source said these are likely issuers that passed bond referenda months or even years ago.

"Economic conditions mean very little when you're a school district in the middle of nowhere in Texas and you need new schools," he said.

"They've passed their referenda and now they're issuing bonds. Simple as that."

In addition to several other districts that priced unlimited tax school building bonds earlier this week, the Beaumont Independent School District, located in Jefferson County, Texas, is gearing up to price $90 million of bonds in March.

A sell-side source said the bonds will price March 14.

The bonds (Aaa/AAA) will be sold through a syndicate led by UBS Investment Bank and the proceeds will be used to construct, equip and renovate schools.

MTA releases terms

Elsewhere, the Metropolitan Transportation Authority of New York City revealed the particulars of its $1 billion sale of transportation revenue bonds on Tuesday.

The offering was upsized from $750 million, said Jeremy Soffin, spokesman for the authority, in an interview Wednesday.

J.P. Morgan Securities won the competitive bid for the bonds (A2/A/A).

The 2008A bonds are due from 2009 to 2010 and from 2016 to 2018 with term bonds due 2036, 2037 and 2038, with coupons from 4% to 5.25% and yields from 2% to 4.86%, according to a term sheet released by the MTA Wednesday.

The 2008B bonds include term bonds due in 2016, 2023, 2027 and 2030. Each of those bonds has a 5% coupon and yields from 3% to 3.52%. The series 2008B bonds have mandatory calls in 2011, 2012, 2013 and 2014, respectively.

In other pricing news, Oregon Housing and Community Services was set to price $105 million in series 2008A, 2008B and 2008C mortgage revenue bonds Wednesday.

The terms of the deal could not be determined Wednesday.

The 2008A bonds have maturities from 2018 to 2022, the 2008B bonds from 2010 to 2017 with term bonds due 2026 and 2038 and the 2008C bonds are due 2038. The 2008C bonds are the only variable-rate bonds.

Merrill Lynch and Bear, Stearns & Co. were the lead managers.

Harris County prices bonds

Harris County, Texas, priced $313.065 million in four bond sales, with yields coming in as low as 1.25% because of the sealed bids offered on the 2008 maturities, Charisse Mosely, deputy director of Harris County's financial services, told Prospect News.

The sealed bids are collected by the underwriter.

"It gives the short-term buyer who may otherwise not purchase the bonds [a chance to] purchase the bonds," she said

The bonds (Aa1/AA+/AA+) priced with a true interest cost of 3.672%.

The county priced series 2008A $34.055 million permanent improvement refunding bonds and series 2008A $34.605 million unlimited tax road refunding bonds.

Those bonds have maturities from 2008 through 2012 and then in 2015.

The permanent improvement bonds had coupon ranges from 4% to 5% with yields from 1.25% to 3.11%. The coupons and yields for the road refunding bonds were not immediately available.

The Harris County Flood Control District priced series 2008A $107.31 million flood control district contract tax refunding bonds and series 2008B $137.095 million variable-rate bonds.

Series 2008A flood bonds, which mature 2015 through 2021, priced with coupons from 4% to 5.25% with yields from 1.63% to 3.88%, Mosely said.

The initial rate on the series 2008B variable-rate bonds has not been set and won't be available until closing on March 5, she said.

Morgan Keegan & Co. and Estrada Hinojosa & Co. are the lead managers.

Yonkers council votes on bonds

In other news, Yonkers, N.Y., is planning to price $54 million in general obligation and school bonds (Baa2/A2) with the city council set to vote on the matter Wednesday night, a source close the offering said.

"They're going to vote on it tonight, so it will not be pricing today," said the source when asked about a previously reported Feb. 13 pricing date for the deal.

Citigroup Global Markets is the lead manager for the negotiated sale.

The bonds will have maturities from 2009 to 2025 with a term bond due 2030.

King County bonds coming

Looking ahead, the Public Hospital District 1 in King County, Wash., also plans to price $115 million limited tax and general obligation bonds on Feb. 20.

Maryland-based Assured Guaranty Corp will guarantee principal and interest.

The series 2008 bonds (Aaa/AAA/AAA) will be sold as fixed-rate bonds with 30-year maturities, said Jeannine Grinnell, vice president of finance and treasurer for Public Hospital District 1, also known as Valley Medical Center.

"Variable rate would be kind of scary in the market right now," she said. "It's a pretty volatile market, but we were always intending for this to be fixed rate."

Proceeds will be used to refund all the district's outstanding hospital facilities revenue bonds series 2005A and series 2005B bonds and to finance a portion of renovations at Valley Medical Center.

Morgan Stanley is the underwriter of the negotiated pricing.

Kent's upcoming offering

Kent, Wash., also in King County, also plans to price $62.635 million of bonds in two sales to private and institutional investors on Tuesday and Wednesday.

The city plans to sell $52.505 million series 2008 special events center sales tax bonds and $10.13 million series 2008 taxable special events center revenue bonds, said Bob Nachlinger, city finance director.

Lead underwriter Piper Jaffray & Co. suggested the retail sale, he said.

"My underwriting team wanted to do it that way. It's what they recommended we do, that's why we hired them," Nachlinger said.

The sales tax bonds have serial maturities from 2020 to 2028 with term bonds in 2033 and 2037. The revenue bonds have serial maturities from 2009 through 2020.

Proceeds will be used to develop the 160,000-square-foot facility that includes a 6,025-seat ice arena.

Rialto's tax allocation bonds

In other upcoming offerings, the Redevelopment Agency of the City of Rialto in California will price $100.11 million in tax allocation bonds on Feb. 28, a preliminary official statement said.

The bonds (A-/BBB+) will be sold competitively and include $46.75 million in series 2008A tax-exempt bonds, $30.795 million in series 2008B taxable bonds and $22.565 million in series 2008C taxable bonds.

The series 2008A bonds are due from 2008 to 2037 and the 2008B bonds are also due from 2008 to 2037. The 2008C bonds have a serial structure with the same maturities.

Proceeds will be used for housing and non-housing related redevelopment activities, as well as for the funding of a reserve account.

El Paso bonds

El Paso, Texas, plans to price $78.08 million in two bond sales on Feb. 21 to help the city fund projects and to pay down outstanding debt, the issuer said Wednesday.

The city expects to sell $56.655 million series 2008 general obligation bonds and $21.425 million series 2008A general obligation refunding bonds, said Bill Studer, deputy city manager for El Paso.

Series 2008 bonds have serial maturities from 2010 to 2033, and series 2008A bonds mature 2009 through 2014.

"We need the cash right now," Studer said. "We've got projects far enough along that we need the cash to fund them."

Proceeds from series 2008 bonds will be used for improvements to the city's park, zoo, library and history museum, as well as improvements for city streets, fire, police and public facilities, Studer said.

Series 2008A bonds proceeds will be used to refund part of the city's outstanding debt to lower its overall annual debt service requirements.

Banc of America Securities LLC is the senior manager of the negotiated sales, with Morgan Stanley and Wachovia Bank as co-managers.

Florida DEP to price deal

Florida has several bond sales in the pipeline.

The state Department of Environmental Protection plans to price $278 million series 2008A Florida forever revenue bonds, a state bond representative said Wednesday.

The preliminary official statement may be released next week, said Carol Bagley, bond development specialist supervisor with the state's division of bond finance.

"It just depends on how the market looks," she said. "It will depend on whether the savings remains there."

Florida also plans to price $315.4 million series 2008A State Board of Education lottery revenue bonds structured July 1 to 2027.

Florida bond sales are on an 18-hour notice.

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