Retail drives municipal market; New Jersey Environmental sells bonds with 2.3568%-2.8889% TICs

By Cristal Cody

Tupelo, Miss., Aug. 4 - Municipal yields were "2 basis points richer" on Wednesday, a trader said.

"Retail has really been driving the market lately," the trader said. "We're at historic lows on yields, and retail is trying to jump in there and gobble up as much as they can right now."

A couple of health offerings from Mississippi and Louisiana were oversubscribed on the retail side on Wednesday, the trader said.

The Mississippi Hospital Equipment and Facilities Authority sold to retail $75 million in series 2010-1 revenue bonds (Aa3/AA/AA) for the North Mississippi Health Services, while the Louisiana Public Facilities Authority sold $87.335 million in revenue and refunding bonds (A3//A-) for the Lafayette General Medical Center.

"Those were very successful on the retail side. It was all oversubscribed," the trader said.

New Jersey Environmental prices

The New Jersey Environmental Infrastructure Trust was more than pleased with the results after it priced $79.18 million in two tranches of refunding bonds (Aaa/AAA/AAA) on Wednesday, Frank Scangarella, chief operating officer, told Prospect News.

"As a result of the refunding, the participating borrowers saved an aggregate $15 million over the life of the loan," he said. "That will aid in these difficult economic budgetary times for our primary municipal borrowers."

The trust received nine bids on the competitive sale of $73.885 million in series 2010A refunding bonds, with Bank of America Merrill Lynch submitting the winning bid of a 2.3568% true interest cost.

The series 2010A bonds were sold with coupons that ranged from 3% to 5% on serial maturities from 2011 through 2024.

The trust received four bids on the sale of $5.295 million in series 2010B bonds with serial maturities from 2011 through 2020. The bonds priced with a 2.8889% TIC from winning bidder Janney Montgomery Scott LLC and coupons that ranged from 2% to 4%.

"We were very happy with the outcome," Scangarella said. "Given the unique nature of the New Jersey Environmental Infrastructure Trust financing program and the strong market for tax exempts, we were optimistic that we would receive good pricing, but this exceeded our expectations."

Public Financial Management Inc. was the financial adviser.

Proceeds from the sale will be used to refund the trust's series 1995A bonds.

Portland to sell

Looking ahead to the upcoming week's sale calendar, the City of Portland, Ore., will price $412.06 million in second-lien sewer system revenue bonds, according to a preliminary official statement.

The series 2010A bonds (Aa3/AAA/) have serial maturities from 2011 through 2035.

The bonds are expected to price through a competitive sale on Tuesday.

Public Financial Management, Inc. is the financial adviser.

Proceeds will be used to finance capital facilities and improvements to the sanitary sewer and storm water drainage system and to repay a line of credit.

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