South Jersey Transportation Authority brings $186.7 million; municipals end mostly unchanged

By Aaron Hochman-Zimmerman and Sheri Kasprzak

New York, July 22 - Municipals stayed fairly unchanged on Wednesday as the primary market continued to dominate activity.

A trader reached during the day said secondary market volume fell off a bit, but that could be because so much interest is shifting to the primary.

"There's a lot going on [in primary] today," he noted. "I'm sure things will pick [on the secondary end] as the week goes on and as primary tapers off somewhat."

Meanwhile, in that active primary market, the South Jersey Transportation Authority priced $186.7 million in series 2009 Build America Bonds and non-taxable transportation system revenue bonds Wednesday, said a pricing sheet released by a sellside source.

The bonds (A3/A-/BBB+) were sold through lead manager Merrill Lynch & Co. Inc.

The sale included $55.8 million in series 2009A-1 non-taxable revenue bonds, $46.4 million in series 2009A-2 non-taxable revenue bonds, $65.3 million in series 2009A-5 Build America Bonds and $19.2 million in series 2009 subordinated bonds.

The 2009A-1 bonds are due 2011 to 2019 with coupons from 3% to 5%.

The 2009A-2 bonds are due 2013 to 2029 with a term bond due 2033. The serials have coupons from 3% to 5.125%. The 2033 bonds have a 5.5% coupon, priced at par.

The 2009A-5 Build America Bonds are due 2038 and have a 7% coupon, priced at 98.096.

The 2009 subordinated bonds are due 2010 to 2028 with coupons from 2% to 5%.

Proceeds will be used to fund transportation improvements throughout southern New Jersey.

Wake County brings $158 million

Also on Wednesday, Wake County, N.C., sold $158.815 million in series 2009A TECO project limited obligation bonds, said Cheryl Spivey, debt manager for the county.

The bonds (Aa1/AA+/AA+) are due 2012 to 2029 with term bonds due 2032 and 2036. The true interest cost came in at 4.31%, Spivey said.

The coupons range from 2% to 5%. The bonds were not reoffered.

"This is a new-money project, an essential project, so we timed our sale based upon the thought we'll be entering into and approving a construction contract within the next week," Spivey said.

Spivey said market conditions were not a factor in planning the offering.

Citigroup Global Markets Inc. and Merrill Lynch were the senior managers.

Proceeds will be used to expand the Hammond Road Detention Center in Raleigh, N.C., which is the county seat.

Carroll ISD sells bonds

In other pricing news, the Carroll Independent School District in Texas sold $78.16 million in series 2009 Build America Bonds and unlimited tax refunding bonds, said a pricing sheet.

The sale included $58.19 million in series 2009A Build America Bonds and $19.97 million in series 2009C unlimited tax refunding bonds.

The bonds were sold through lead manager RBC Capital Markets Corp.

The 2009A bonds are due 2014 to 2021 with term bonds due 2024, 2029 and 2034. The serials have coupons from 3.75% to 5.409%. The 2024s have a 6.125% coupon, the 2029s have a 6.875% coupon, and the 2034s have a 6.676% coupon, all priced at par.

The 2009C bonds are due 2014 to 2026 with term bonds due 2028 and 2030. The serials have coupons from 2.5% to 5.25%. The 2028 bonds have a 4.5% coupon, priced at 98.763, and the 2030 bonds have a 4.7% coupon, priced at 98.962.

Proceeds will be used to refund existing debt and to improve school buildings within the district, which is located in Grapevine, Texas.

Newark Housing prices

The Newark Housing Authority, N.J., priced $68 million series 2009A city-secured police facilities revenue bond (Aa2//, Baa2 underlying) with an all-in TIC of 6.472%, according to Eddie Chan, a Loop Capital Markets LLC vice president.

The bonds carry serial maturities from 2010 to 2013 with term bonds due 2018, 2021, 2026, 2030 and 2038.

"We were able to get an oversubscription at every maturity, including the long-term bond, which is surprising," Chan said.

The success was "well above everyone's expectations," he said.

The bonds also carried nearly $1.5 million in municipal bond insurance from Assured Guaranty Corp.

Many in the market feel that bond insurers are no more secure than the issuers they insure, but Chan felt the $1.5 million was worthwhile.

Without the insurance, the all-in TIC of 6.472% would have been "something north of 7.5%," he said.

Loop Capital Markets acted as underwriter for the negotiated deal.

Proceeds will be used to construct a new police station.

Memorial Health prices

In other pricing news for the week, the Memorial Health System in Colorado priced $101.945 million series 2009 hospital revenue and refunding bonds (A3/A-/) on Tuesday, according to Mike Schialdone, health system chief financial officer.

"It was a very successful placement with significant over-orders [for each of the serial maturities]," said Schialdone.

The issue had been in the planning stage for some time, Schialdone said.

"When the auction-rate market crashed at the end of 2008 ... there was no liquidity in the market, and we got stuck paying 12% interest and we were upside-down on swaps," he said.

After the collapse of the auction-rates, "we put together this plan and a term loan to get out of the auction-rate market," he said.

The health system waited, and "now seemed like the market was appropriate to execute the plan," he said.

The bonds carry yields ranging from 3.2% to 6.4%, serial maturities from 2012 to 2019 and term bonds due 2024, 2029 and 2033.

Goldman, Sachs & Co. acted as underwriter for the negotiated bonds.

Proceeds will be used to refund $164 million in auction-rate securities with swap positions as well as establish a reserve fund.

The Memorial Health System is located in Colorado Springs.

Metro Washington Airports deal

Looking to upcoming sales, the Metropolitan Washington Airports Authority is scheduled during the week of Aug. 3 to price $826,950,343 in series 2009 Dulles Toll Road revenue bonds, said a preliminary official statement.

The deal includes $173 million in series 2009A current interest bonds, $111,539,290 in series 2009B capital appreciation bonds, $182,881,053 in series 2009C convertible capital appreciation bonds and $359.53 million in series 2009D current interest Build America Bonds.

Citigroup and Morgan Stanley & Co. Inc. are the co-lead managers.

Proceeds will be used to fund the Dulles Toll Road.

L.A. USD notes

Also coming up, the Los Angeles Unified School District is expected to price $750 million in series 2009-2010A tax and revenue anticipation notes, said a preliminary official statement.

The notes are due Aug. 12, 2010.

Barclays Capital Inc. is the senior manager. The co-managers are Citigroup, J.P. Morgan Securities Inc. and De La Rosa & Co.

Proceeds will be used to fund general capital requirements for the district during the fiscal year.

Secondary unmoved

Elsewhere, a trader said Wednesday that the market was relatively unmoved with light trading activity.

Among Wednesday's trading action were the Louisiana Public Facilities Authority's revenue bonds for the Franciscan Missionaries of Our Lady of Lourdes. The 6.625% 2033 bonds were seen at 6.524% Wednesday afternoon. The 6.75% 2039s were seen at 6.828%.

Elsewhere, the City of Colorado Spring's hospital revenue bonds were seen in action. The 6.25% 2033 bonds were seen at 5.971%. The 5.75% 2024 bonds were seen at 5.64%.

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