Washington brings $400 million G.O.s with 4.557%, 4.565% TICs; Chester County, Pa., sells $118 million G.O.s

By Aaron Hochman-Zimmerman and Sheri Kasprzak

New York, Jan. 7 - Pricing action continued to build on Wednesday, led by a $400 million general obligation bond sale from the State of Washington, and new issues will continue to dominate the week with billions in sales planned for Thursday.

Earlier this week, bond market sources said a good portion of the upcoming deals were offerings that had been held back from 2008, but Washington's sale was brand new.

The state sold $270 million in series 2009C various purpose G.O.s with a 4.557% true interest cost and $130 million in series 2009D motor vehicle fuel tax G.O.s with a 4.565% TIC. J.P. Morgan Securities Inc. was the winning bidder for both the competitive sales, said Karl Roeber, spokesman for the state treasurer's office.

Both bonds are due 2010 to 2034, but the coupons and yields were not immediately available.

Five bidders participated in the competitive sale, including J.P. Morgan, Barclays Capital Inc., Merrill Lynch & Co., Citigroup Global Markets and Goldman, Sachs & Co.

"We are very pleased with the results," state treasurer Michael Murphy said in a statement released Wednesday afternoon.

"The fact that we received five bids in both sales shows that Washington maintains a very good credit rating and the market still has a strong interest in quality municipal bonds."

Proceeds from the 2009C bonds will be used for various capital purposes, including projects at state buildings and facilities for higher education, multimodal transportation projects, flood hazard mitigation, public school skill center facilities and the rehabilitation of Puget Sound. Proceeds from the 2009D bonds will be used for expenses related to highway improvements, the construction of 2003 projects or improvements and the construction of 2005 transportation partnership projects or improvements.

Chester County bond sale

In other pricing news Wednesday, Chester County in Pennsylvania priced $118 million in series 2009 G.O. bonds (Aaa) through senior manager Merrill Lynch, said county finance director Denny Bolton.

The bonds are due 2009 to 2029 with a high coupon of 5%. The yields range from 0.85% to 4.89%.

"It went very well," Bolton said in an interview Wednesday.

"We had contemplated going out Dec. 18, and it looks like we're about 40 basis points lower."

Proceeds will be used to replace the county's series 2001, 2003, 2004, 2006 and 2007 G.O. bonds as well as the Delaware Valley Regional Finance Authority's series 2007B, 2007C and 2007D G.O. bonds.

The debt that will be refinanced with the bond proceeds was "replaced with a fixed rate," Bolton explained.

"It creates a debt structure for $200 million of capital projects in [2009]. It maintains our Aaa rating. There was a significant institutional purchase [base for] the long bonds from 2024 to 2029. There was more-than-anticipated institutional interest, which is a good sign for the economy."

New Castle County sells bonds

Elsewhere in pricing news, the terms emerged Wednesday for New Castle County, Del.'s $107.105 million in series 2009A G.O. bonds (Aaa/AAA/AAA), which priced Tuesday.

The downsized bonds were sold through lead manager Merrill Lynch. The county had originally planned to sell $110.74 million of the bonds.

The bonds are due 2009 to 2028 with coupons from 2.5% to 5% and yields from 0.75% to 4.82%. The offering also included term bonds due 2033 and 2039. The 2033 bonds have a 5% coupon to yield 5.03%, and the 2039 bonds have a 5% coupon to yield 5.1%.

Proceeds will be used for capital improvement projects and for refunding the county's series 1998 bonds.

New deals for Thursday

Pricing activity may have picked up somewhat earlier in the week, but action will really take off on Thursday, when billions of dollars in new offerings are planned.

The action on Thursday is led by the New York State Urban Development Corp.'s $1.098 billion in series 2009 state personal income tax revenue bonds. Those bonds will be sold through lead manager Citigroup Global Markets, and proceeds will be used for technology projects under the state's Technology and Development Program as well as for grants and loans.

Also coming up Thursday, the Virginia College Building Authority is gearing up to sell $330 million in series 2009A educational facilities revenue bonds (Aa1) on a negotiated basis.

Those bonds are due 2009 to 2038, and proceeds will be used to acquire notes issued by nine state higher educational institutions.

Elsewhere, the Indiana Finance Authority will price $271.275 million in series 2009A refunding revenue bonds (Aaa/VMIG 1) on Thursday for Duke Energy Indiana Inc.

Finally, the Florida Water Pollution Control Financing Corp. is planning to sell $201.12 million series 2008A water pollution control revenue bonds Thursday through lead manager Citigroup Global Markets. The bonds are due 2010 to 2023 with a term bond due 2029.

Proceeds will be used for water pollution control projects throughout the state.

Chandler, Ariz., sale ahead

Moving to offerings planned for later this month, the City of Chandler in Arizona is scheduled to sell $252 million in series 2009 G.O. bonds on Tuesday, said a notice of sale released Wednesday.

The bonds will be sold on a competitive basis and are due from 2010 to 2028.

Proceeds will be used for the construction, improvement and equipment of library, civic, airport, public parking garage, street, public safety for fire and police, water, wastewater, storm water and park facilities and improvements in the city.

Also coming up on Tuesday, the Massachusetts State College Building Authority is slated to price $130 million in series 2009A project revenue bonds, said a preliminary official statement.

The bonds (A1/A+/) will be sold on a negotiated basis with J.P. Morgan and Depfa First Albany Securities LLC as the senior managers.

Proceeds will be used for the construction and expansion of residence halls at the Salem State College and Worcester State College; the renewal of residence halls at Bridgewater State College, Fitchburg State College, Massachusetts College of Liberal Arts, Salem State College, Westfield State College and Worcester State College; a property acquisition and parking facility at Framingham State College; and a student center at Massachusetts College of Art and Design.

U of Southern California sale

In other upcoming deals, the California Educational Facilities Authority is scheduled to price $215 million in series 2009A revenue bonds for the University of Southern California, said a preliminary official statement released Wednesday.

The bonds (Aa1) are tentatively slated to price Jan. 14

Morgan Stanley & Co. and Prager, Sealy & Co. are the lead managers for the negotiated offering.

The maturity date for the bonds has not yet been determined.

Proceeds will be used for the acquisition of the University of Southern California University Hospital and Norris Center Hospital. The remainder will be used for capital projects, including the university's campus center, student health center, Parkside Residential College and the Broad CIRM Center for Regenerative Medicine and Stem Cell Research.

Ohio Building Authority

Looking a bit further out, the Ohio Building Authority is expected to sell $139.79 million in series 2009A state facilities bonds, said a preliminary official statement.

The sale includes $60 million in administrative building fund projects bonds, $40 million in adult correctional building fund projects bonds, $1.725 million in highway safety building fund projects bonds and $38.065 million in juvenile correctional building fund projects bonds.

The administrative building bonds are due 2010 to 2028; the adult correctional building fund bonds are due 2010 to 2028; the highway safety bonds are due 2010 to 2012; and the juvenile correctional building bonds are due 2009 to 2014.

The bonds will be sold on a negotiated basis with Wachovia Securities as the senior manager.

Proceeds will be used for capital facilities to be leased to the Department of Rehabilitation and Correction of the State of Ohio, paying costs of some capital facilities to be leased to the Department of Public Safety and refunding the state's series 1999B state facilities refunding bonds for the Juvenile Correctional Building Fund Projects.

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