Clark County brings $210 million Build America Bonds; California bonds flying off the shelf

By Aaron Hochman-Zimmerman and Sheri Kasprzak

New York, June 10 - Ahead of a big day for primary offerings, municipals suffered more weakness, said a trader reached during the day.

"It's been a brutal week," he noted.

"Treasuries are taking a hit, and we're off with them. I'd say maybe 2, 3 basis points. Every day, it's been about the same. Yields are up about that much again today."

On the left coast, traders said California bonds were selling like hotcakes.

"It is raining Cal [general obligation] bonds today, I can tell you that," said trader Anthony Shields, Grigsby & Associates senior vice president.

"They been close to a 200 [bps] spread to the AAA scale," he said.

The gap in the California budget remains.

"[There are] a lot of questions, still," he said.

The way the bonds have traded has all the earmarks of an impending downgrade, Shields said.

Moody's circulated a press release notifying traders that the $1.1 billion in tax and revenue anticipation notes expected from Los Angeles County Thursday were not affected by Gov. Arnold Schwarzenegger's new budget proposals.

However, the proposal to drastically cut the Calworks welfare program could have a material effect on the county's 2009-10 cash flow, the release said.

The county would then be forced to take on a $400 million burden.

"Although this figure represents a 2.7% increase to the county's projected 2009-10 general fund cash disbursements, we do not expect it to impair note holder security of the county's 2009-10 tax and revenue anticipation notes, which we rate MIG 1," Moody's said.

Clark County's $210 million

Moving to Wednesday's pricing action, Clark County, Nev., priced $210 million in transportation and flood control Build America Bonds (Aa1//) on Tuesday, according to Tom Wilson of the Clark County comptroller's office.

The series 2009A $60 million transportation bonds priced with a true interest cost of 4.5% and carry maturities from 2009 to 2039.

The series 2009B $150 million flood control bonds priced with a TIC of 4.1% and carry maturities from 2009 to 2029.

Merrill Lynch & Co. acted as underwriter for the negotiated bonds.

Proceeds will be used to refund series 1998 bonds.

The Clark County seat is Las Vegas.

In other news, the Puerto Rico Sales Tax Financing Corp. priced $4.5 billion in series 2009 sales tax revenue bonds (A2/A+/A), but the terms were not immediately available.

The deal was upsized from $3.5 billion.

Citigroup Global Markets Inc. was the senior manager.

The sale included current interest bonds, which are due 2014 to 2020 with term bonds due 2024, 2039, 2042 and 2044, and capital appreciation bonds, which are due 2021 to 2036.

Proceeds will be used to pay for operating expenses and to fund the government's stimulus plan.

Texas WDB prices bonds

In other pricing news from the week, the Texas Water Development Board sold $330.61 million in series 2009 water financial assistance and refunding G.O. bonds Tuesday, said Piper Montemayor, the board's financial director.

The bonds (Aa1/AA/AA+) were sold through senior manager J.P. Morgan Securities Inc.

The sale included $223.805 million in series 2009C-1 bonds, $57.94 million in series 2009C-2 bonds and $48.865 million in series 2009D bonds.

The 2009C-1 bonds are due 2011 to 2029 with term bonds due 2034 and 2039. The serials have coupons from 3% to 5% and yields from 1.25% to 4.68%. The 2034 bonds have a 5% coupon, priced at par. The 2039 bonds have a 5% coupon to yield 5.03%.

The 2009C-2 bonds are due 2011 to 2023 with coupons from 3% to 5% and yields from 1.25% to 4.26%.

The 2009D bonds are due 2020 to 2029 with a term bond due 2035. The serials have coupons from 4% to 5% and yields from 3.74% to 4.68%. The 2035 bonds have a 5% coupon to yield 5.01%.

In reoffering news, the series 2009C-2 bonds were moving. The 4.1% 2022s were reoffered at 4.14%. The 4% 2021 bonds were reoffered at par, and the 3.5% 2020 bonds were reoffered at 3.77%.

Proceeds will be used to fund improvements to the state's water systems.

Adventist Health to sell

Looking ahead to Thursday's busy day for sales, the Kansas Development Finance Authority is set to price $333.805 million in series 2009C hospital revenue bonds for Adventist Health System, said Rebecca Floyd, executive vice president of the authority Wednesday.

The bonds (A1/A+/AA-) will be sold through lead manager Ziegler Capital Markets Inc.

The bonds are due 2038.

Proceeds will be used to refund a portion of Adventist's variable-rate demand bonds.

U of Maryland deal ahead

A little farther out, the University of Maryland is expected to sell $144.325 million in series 2009 auxiliary facility and tuition revenue bonds, said a preliminary official statement. The sale is set for Tuesday.

The sale includes $61.05 million in series 2009A tax-exempt bonds, $38.95 million in series 2009B Build America Bonds and $44.325 million in series 2009C tax-exempt bonds.

The 2009A bonds are due 2010 to 2023, and the 2009B bonds are due 2024 to 2029. The 2009C bonds are due 2009 to 2019.

The bonds (Aa2/AA+/AA) will be sold competitively with Public Financial Management Inc. as the financial adviser.

Proceeds will be used to refund the university's series 1997A and 1999A bonds.

The university is based in College Park, Md.

Miami-Dade's baseball deal

The County of Miami-Dade in Florida is winding up to price two separate offerings to fund a new baseball stadium for the Florida Marlins.

The county is expected to price $340 million in series 2009 professional sports franchise facilities tax revenue and revenue refunding bonds (Aa2/AAA/AA) and $100 million in series 2009 subordinate special obligation bonds (A3/A+/A), said preliminary official statements. Pricing for both is expected in mid-June.

Merrill Lynch & Co. Inc. is the lead manager for the sale of professional sports franchise facilities tax revenue and revenue refunding bonds. JPMorgan is the lead manager for the special obligation bonds.

The maturities have not yet been set.

North Central Texas sale

Also ahead in June, the North Central Texas Health Facilities Development Corp. plans to sell $200 million in series 2009 hospital revenue bonds for the Children's Medical Center of Dallas, said a preliminary official statement.

The bonds (Aa3//AA) will be sold on a negotiated basis with Goldman, Sachs & Co. and JPMorgan as the senior managers.

The bonds are due 2017 to 2039 with term bonds. The maturities for the term bonds have not yet been set.

Proceeds will be used to reimburse the medical center for capital expenditures.

Secondary continues weak trend

Moving to the secondary market, traders Thursday said yields for tax-exempts continued to rise by as much as 3 bps.

Among the light trading action was the East Baton Rouge Sewage Commission of Louisiana. The commission's series 2009A revenue bonds were seen moving. The 5.25% 2039 bonds were seen at 5.38%.

Elsewhere, the New York City Transitional Facilities Authority's series 2009S-5 bonds were also moving. The 5.25% 2039s were seen at 5.317%.

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