San Antonio Water brings $175 million bonds to yield 0.5%-5.4%; New York Water to sell $300 million

By Aaron Hochman-Zimmerman and Sheri Kasprzak

New York, Jan. 21 - Despite the shortened week, several issuers priced long-awaited sales Wednesday - and even more pricing action is expected for Thursday.

"It has been a tough market today," noted one sellside source reached during the afternoon.

"Comparatively, it's still not so bad. It doesn't surprise me that something that couldn't get done in late 2008 would be getting done today at pretty good rates."

In fact, the San Antonio Water System priced $175 million in series 2009 water system revenue and refunding bonds after holding off on pricing the deal in December.

"We're thrilled," Doug Evanson, chief financial officer of the city's water system, said when asked about the terms of the bonds, which priced late Wednesday afternoon.

"It was somewhat of a tough market but certainly much better than a few months ago. We were trying to do this transaction in late 2008. We got much better pricing today than we would have if we had done the transaction then."

The bonds (Aa2/AA/AA) are due 2009 to 2039 with coupons from 3% to 5.375% and yields from 0.5% to 5.4%.

Citigroup Global Markets Inc. and J.P. Morgan Securities Inc. were the lead managers.

Proceeds will be used to construct, equip, expand and improve the city's water system and to refund outstanding commercial paper notes.

Elsewhere in Wednesday's pricing activity, the State of Connecticut had been slated to sell $420 million in series 2009-1 second lien special tax obligation refunding bonds through lead managers Goldman, Sachs & Co. and Banc of America Securities LLC. Calls for the terms of the sale were not immediately returned.

The bonds are due 2010 to 2022, and proceeds will fund transportation infrastructure costs.

New York water deal ahead

Thursday's pricing calendar is looking even more active, with more than a billion dollars in sales planned.

The big deal of the day comes from the New York Municipal Water Finance Authority, which is gearing up to sell $300 million in series 2009EE water and sewer system second general resolution revenue bonds (Aa3/AA+/AA) through lead manager Siebert Brandford Shank & Co.

The proceeds will be used for construction costs.

Another large deal set for Thursday is from the Tarrant County Cultural Education Facilities Finance Corp. of Texas. The corporation plans to price $215.18 million in series 2009 health revenue refunding bonds (Aa2/AA-/) for the Baylor Health System.

The bonds are due 2009 to 2019 with term bonds due 2024 and 2029.

The lead managers are Merrill Lynch & Co. and Goldman Sachs.

Proceeds will refund the health system's series 2001B and 2001C revenue bonds and repay a loan advance from Banc of America and JPMorgan Chase Bank.

D.C. water and sewer deal

Moving a bit further ahead, the District of Columbia Water and Sewer Authority will offer $300 million in series 2009A public utility senior lien revenue bonds (Aa3/AA/AA-) beginning Jan. 27, according to the authority's chief financial officer, Olu Adebo.

"I'd like it to be something in the 5.25% range," he said about yields, although "it's hard to tell in this market."

The structure of the bonds has not been finalized, but the range of maturities will likely reach from 10-year to 30-year bonds.

Bonds suited to retail investors will have shorter maturities, near 10 years, he said, while the institutional investors will likely be more attracted to 30-year maturities.

The sale includes a retail order period beginning Jan. 27 with institutional orders on Jan. 28, Adebo said.

Morgan Stanley will act as lead underwriter.

The authority is conducting an online road show, with an investor call scheduled for 3 p.m. ET Thursday.

Proceeds will be used for improvements to the system and to refinance existing debt.

New York IDA baseball bonds

Meanwhile, the New York City Industrial Development Agency is looking to hit a homerun with its planned $82.28 million series 2009 pilot bonds to help fund the construction of Citi Field, the new home of the New York Mets.

The bonds (Aa2/AAA/) are due 2010 to 2019 with a term bond due Jan. 1, 2030, said a preliminary official statement released Wednesday.

Citigroup Global Markets is the senior manager for the negotiated sale.

Pricing is expected for January, but no exact date could be determined Wednesday.

Secondary remains weaker

Moving to the secondary market, the tone remained weaker on Wednesday and was off by a few basis points, said a trader reached in the afternoon.

"We're still off a bit," he said. "Volume has been OK. It's not as bad as I have seen it. It's just been a tough day for us. We're following Treasuries."

Looking at specific trades, the recently freed-to-trade series 787 general obligation bonds from Wichita, Kan., saw some trading action on Wednesday. The 4% 2023s were seen trading at 3.99%.

Also recently freed, the New Orleans Aviation Board's series 2009 revenue refunding bonds were in play. The 5% 2019s were seen trading just under par. The 6% 2023s were trading at 5.617%.

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