Georgia State Road and Tollway prices $600 million; Union County, N.C., prices; traders run to quality

By Aaron Hochman-Zimmerman and Cristal Cody

New York, Feb. 18 - Municipal bonds performed generally well on Wednesday despite a overall downward trend in the market.

Equities survived a test of the 2008 lows, which allowed some cause for guarded optimism.

The Georgia State Road and Tollway Authority priced its $600 million deal in line with its expectations, but Union County, N.C., found little appetite once its paper hit the secondary.

In trading, investors' interest in high-quality paper "is still very strong," a senior trader said, and "that trend will continue as long as the volatility remains."

Market tone was very difficult on Wednesday despite equities ending flat for the session, but investors looked ahead to what is expected to be a near-term future full of Treasury auctions.

The volume of Treasuries is sure to increase "because of the stimulus plan," the trader said.

The market can expect "a tremendous influx of Treasury securities, and that will start to cheapen the Treasury market," he said.

Diluting the Treasury market will definitely have an effect on the municipal world, but exactly what effect "remains to be seen," he said.

Meanwhile, spreads continued to widen out, particularly in the odd lots, another trader said.

The MMD was cut 3 to 5 basis points, he added.

Union County prints $64.5 million

In the primary, Union County in North Carolina priced $64.5 million series 2009 general obligation school bonds (Aa2/AA/AA) at a true interest cost of 3.64%, according to financial director Kai Nelson.

"We had 11 bids .... We were very pleased," Nelson said.

Merrill Lynch & Co. won the auction for the competitive bonds. Wachovia was the cover with a bid of 3.66%.

The bonds carry maturities from 2010 to 2029.

Proceeds are intended to be used to construct, equip and acquire school buildings.

The Union County seat is in Monroe.

The deal was "reasonably priced and well structured," a trader said, but there was virtually no retail inquiry from usual customers Schwab and Pershing.

"No orders," he said about the Union County deal, blaming the market's "general weakness" for the lack of appetite.

Georgia State Road and Tollway sells $600 million

Just to the south, the Georgia State Road and Tollway Authority priced $600 million series 2009 revenue bonds (Aa3/AA-/AA-), according to chief operating officer Teresa Slack.

The bonds fetched a TIC of 3.3222754% and a yield range of 1.05% to 4%.

The sale went well, Slack said. "Right where we expected it."

The bonds were split into two tranches.

The authority priced $480 million of the series 2009A federal highway grant anticipation revenue bonds and $120 million of the series 2009A federal highway reimbursement revenue bonds.

The series A bonds carry maturities from 2010 to 2021, and the series B bonds are due from 2010 to 2021.

Barclays Capital Inc. acted as lead underwriter for the negotiated issue.

The bonds due 2020 and 2021 are callable, excluding the 4% federal highway reimbursement revenue bonds due 2021.

Proceeds will fund a portion of land transportation initiatives and refund series 2006 and series 2008 revenue bonds as well as refinance commercial paper notes.

NY State Thruway prices

Also, the New York State Thruway Authority priced its series 2009A second general highway and bridge trust fund bonds (/AA/AA-), according to an informed source.

The deal was pushed up ahead of schedule, the source said, and "was going pretty good business in the morning" with retail investors.

When the institutional side showed interest later on, "they wrapped it up all in one day," the source said.

Considering the market, "it was a tad unusual," he said.

The authority was scheduled to print $206.05 million of the bonds due from 2010 to 2029.

Banc of America Securities LLC and Jackson Securities Inc. acted as lead underwriters for the negotiated issue.

Proceeds from the sale will be used to reimburse the state for costs made by the Department of Transportation for the state's highway and bridge capital program.

Miami Valley sells out

In other pricings, a source with Miami Valley Hospital and MedAmerica Health Systems Corp. said Wednesday that the Ohio hospital sold out almost immediately on its $130 million offering of revenue refunding bonds.

"We received more money than we had expected," the source said of the series 2009A and 2009B bonds (//AA-).

Merrill Lynch was the senior manager, and Goldman, Sachs & Co. was the co-manager of the negotiated sale last week.

The proceeds will be used to refinance existing debt.

Additional pricing details were not immediately available.

Cleveland ups fixed-rate portion

Cleveland sold $165.655 million in fixed-rate and variable-rate water revenue bonds, the city told Prospect News on Wednesday.

"We found we could [sell] more fixed rate, so we increased the size of the series T bonds and reduced the variable-rate portion," Betsy Hruby, debt manager, said in an interview.

Instead, the city sold a total of $81.03 million in variable-rate bonds, she said.

"The series R and S bonds originally were going to be $130 million," Hruby said. "We were able to do the shorter maturities at a fixed rate that was comparable to what we had been paying and decided it would be better to have as much of that as we could."

The $54.735 million series 2009R variable-rate bonds (VMIG 1/A1/) priced with an initial weekly interest rate of 0.35%.

The $26.295 million series 2009S variable-rate bonds (VMIG 1/A1/) priced with an initial weekly interest rate of 0.45%.

The variable-rate bonds are due in 2033.

The $84.625 million series 2009T fixed-rate bonds (Aa2/AA/) priced with a 3.33% TIC, Hruby said.

The bonds were sold with an average 4.597% coupon to yield 3.17%.

The bonds have serial maturities from 2010 through 2021.

Merrill Lynch and Morgan Stanley & Co. Inc. were the senior managers of the negotiated sales.

The proceeds will be used to refund the city's series M bonds on Feb. 27.

University System of N.H. to sell $110 million

On the horizon, the University System of New Hampshire intends to price $110 million in revenue bonds through the New Hampshire Health and Education Facilities Authority, according to a preliminary official statement.

The series 2009A bonds (A1/A+/) will be sold through a negotiated sale led by Barclays Capital.

J.P. Morgan Securities Inc. and Morgan Stanley are co-managers.

The proceeds will be used to finance university improvements and refinance the series 2006A and 2006B1 revenue bonds.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.