Municipal market pours on supply; New Jersey prices $1.93 billion TRANs; Maryland adds paper

By Aaron Hochman-Zimmerman

New York, Aug. 5 - The municipal market continued to see new money flow in as more highly anticipated deals came to market.

New Jersey's behemoth deal attracted attention from around the market-scape. For a state with budget troubles, the deal went very smoothly.

"I would've assumed that the California, New Jersey, Illinois folks would factor in some kind of premium," said Tom Kozlik, Janney Montgomery Scott LLC vice president and municipal credit analyst.

From the way the deal looked immediately after pricing, it seemed "not in this case" was some kind of premium necessary, he said.

New Jersey prices $1.93 billion

New Jersey sold $1.925 billion series fiscal 2010B tax and anticipation revenue notes (/SP-1+/) at a true interest cost of 0.54%, according to Tom Vincz, spokesman for the state treasurer.

Vincz called the TIC "microscopic," adding that the rate was the lowest fixed rate New Jersey has offered since it began issuing tax and anticipation revenue notes in 1992.

The figure was "in the ballpark of what we were expecting," he said, "in this favorable market."

J.P. Morgan Securities Inc. won $1.625 billion, Jefferies & Co. won $225 million and Citigroup Global Markets Inc. won $75 million at the competitive auction.

Ten bidders participated and offered 38 bids totaling $10.825 billion. The issue was oversubscribed by more than five-and-a-half times.

The notes mature on June 24, 2010.

Proceeds will be used for cash flow management.

Maryland adds another $485 million

Maryland priced $485 million in bonds (Aaa/AAA/AAA) on Wednesday.

A $235 million general obligation tranche came as a negotiated deal via Citigroup Global Markets.

The bonds carry maturities from 2012 to 2023 and yields from 0.94% to 3.17%.

The state sold $200 million tax-exempt bonds to JPMorgan via competitive auction.

The state also decided to sell $50 million competitively as Build America Bonds rather than in a tax-exempt format. Details of the sale were not available.

Proceeds will be used for the acquisition and construction of state facilities.

Golden State deals ahead

Los Angeles priced $123.55 million series 2009A G.O. bonds at a TIC of 3.1225%, according to a market source.

JPMorgan won the auction over seven other bidders.

Public Resources Advisory Group LLC acted as financial adviser for the bonds, which carry serial maturities from 2010 to 2023.

Proceeds are intended to fund environmental cleanup efforts, including cleaning polluted storm water, as well as keeping pollution, toxic chemicals, bacteria and other contaminants from beaches.

When asked if Sacramento's budget trouble impacted the sale, the source said: "They bought it."

Orange County Water District in California announced the pricing of $131 million series 2009 water district refunding certificates of participation (Aa2/AAA/) at a 4.99% TIC, according to executive director John Kennedy.

Citigroup Global Markets acted as lead underwriter for the negotiated deal.

The bonds carry serial maturities from 2010 to 2029 with term bonds due 2034 and 2041.

Proceeds will be used to make improvements to the water district.

The sale went well, Kennedy said. "The underwriter did not have to buy any debt," he said. "Our debt is usually bought up pretty quickly."

The state's budget crisis looks only to have a limited impact on the water district.

"We get $19 million in property taxes, state will take $1.5 million," Kennedy said. "We're well positioned for whatever they may do."

The county seat is Santa Ana, Calif.

Water districts to sell

Meanwhile, two more water districts plan to offer upcoming sales.

The Metropolitan Water Reclamation District of Greater Chicago expects to sell $600 million in series 2009 G.O. capital improvements bonds on Tuesday, Harold Downs, the district's treasurer, told Prospect News.

The Build America limited tax series of August term bonds are due Dec. 1, 2038.

Mesirow Financial, Inc. and Loop Capital Markets, LLC are the lead managers of the negotiated sale.

George K. Baum & Co.; William Blair & Co.; Cabrera Capital Markets, LLC; Jefferies; Melvin Securities, LLC; Merrill Lynch & Co.; Podesta & Co.; Ramirez & Co., Inc.; SBK-Brooks Investment Corp.; and Siebert Brandford Shank & Co., LLC are co-managers.

The proceeds will be used to finance water quality and sewer treatment construction projects.

Also ahead, Hamilton County, Ohio, intends to sell $161.41 million in sewer system improvement revenue bonds for the Metropolitan Sewer District of Greater Cincinnati, according to a preliminary official statement.

The $45.965 million series 2009A tax-exempt bonds have serial maturities from 2010 through 2019.

The $115.445 million series 2009B taxable bonds have serial maturities from 2020 through 2024 and a term maturity due Dec. 1, 2034.

Citigroup Global Markets and RBC Capital Markets Corp. are the senior managers of the negotiated sale.

The bonds (Aa3/AA+/) will be sold to fund capital improvement projects and to fund the district's reserve account.

Bonds by the bay

Also in California, the Bay Area Toll Authority will sell $775 million series 2009F-1 revenue refunding bonds, according to Brian Mayhew, chief financial officer.

The bonds will price after a retail order period on Tuesday and an institutional order period on Aug. 12.

The bonds will carry serial maturities from 2020 to 2029 and term bonds due 2034 and 2039.

Merrill Lynch and Citigroup Global Markets will act as underwriters for the negotiated deal.

Proceeds will be used to retire outstanding debt.

"We're taking out some variable-rate bonds" and replacing them with fixed-rate paper, Mayhew said

The Bay Area Toll Authority is located in Oakland.

Rhode Island to sell $350 million

Coming up in August, the State of Rhode Island and Providence Plantations plans to price $350 million in G.O. tax anticipation notes on Aug. 12, state deputy budget officer Thomas Mullaney told Prospect News on Wednesday.

The fiscal year 2010 notes (/SP-1+/) are due June 30, 2010.

Janney Montgomery Scott is the senior manager of the negotiated sale, and Citigroup Global Markets is the co-manager.

The proceeds will be used by the state for general expenses.

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