Austin, Texas, sells $175 million in revenue refunding bonds; Texas Transportation bonds price

By Cristal Cody and Sheri Kasprzak

New York, July 25 - Market activity remained fairly quiet on Friday as issuers continue to weigh their options about new issue offerings.

Even so, the number of upcoming sales picked up somewhat on Friday, giving an indication that issuers' fears might be lifting.

Looking to pricing action from earlier in the week, Austin, Texas, priced $175 million electric utility system revenue refunding bonds with a 5.2367% true interest cost, the issuer said Friday.

The series 2008A bonds priced on Thursday with 4% to 6% coupons to yield 2.82% to 5.33%, said Art Alfaro, city treasurer.

The bonds (A1/A+/AA-) have serial maturities from 2010 through 2038.

The city originally had planned to pay for an insurance policy by Assured Guaranty Corp. but removed the policy late Wednesday after news that Moody's Investors Service may downgrade the insurer.

"It threw a kink in and made the rates go up higher," Alfaro said. "We knew in the morning the market had moved away from us and it was going to be tough," he said. "We had hoped for probably in the 5.10% range and we ended up at 5.23%. Other deals in Texas that priced earlier in the week priced better than we did, but we needed to price this before it got any worse."

Merrill Lynch & Co. was the winning bidder in the competitive sale and insured some of the later maturities through Berkshire Hathaway.

Proceeds will be used to refund Austin's outstanding commercial paper, which will allow the city to restore the available capital under its commercial paper note program and sell additional notes.

Texas Transportation bonds price

Still, another Texas issuer waited until later in the day and found better rates.

The Texas Transportation Commission priced $162.99 million state highway fund first tier revenue bonds with a 4.44% true interest cost, a market source said Friday.

The series 2008 bonds (Aa1/AAA/) priced with 5% to 5.25% coupons to yield 3.92% to 4.72% for the serial maturities in 2018 through 2028.

"We ended up at lower yields than expected because the market rallied. We did reprice, so we were able to move with the market," the source said.

The 2013 through 2017 serial maturities were sold through retail orders with 3.5% to 4% coupons to yield 2.3% to 3.27%.

Morgan Keegan & Co. was the senior manager of the negotiated sale.

Proceeds will be used to finance state highway improvement projects.

Puerto Rico Housing sale

New offerings picked up Friday, led by news the Puerto Rico Housing Finance Authority plans to price $490.02 million in bonds on Tuesday, according to a sale calendar.

The $374.22 million capital fund modernization program subordinate bonds for Puerto Rico Public Housing Projects have serial maturities from Dec. 1, 2008 through Dec. 1, 2018.

JPMorgan is the senior manager of the negotiated sale.

The second part of the sale includes $115.8 million housing revenue bonds for the Vivienda Modernization 1 LLC project.

The series 2008 bonds are due Oct. 1, 2011.

JPMorgan is the senior manager of the negotiated sale.

Proceeds from both series will be used by a new limited liability company to purchase 33 public housing projects and rehabilitate the properties for public housing.

New Jersey student bonds

Also coming up this week, the New Jersey Higher Education Student Assistance Authority plans to price its previously announced $350 million series 2008A student loan revenue bonds on Thursday, according to a calendar of upcoming deals.

The bonds will be sold on a negotiated basis with Morgan Stanley as the senior manager.

The bonds are due from 2014 to 2018 with term bonds due 2023 and 2030.

Proceeds will be used to make deposits to the student loan and capitalized interest funds.

California Academy bonds on tap

In other news, the California Academy of Sciences plans to price its previously announced $287.89 million in series 2008 variable-rate demand revenue bonds on Tuesday, said Stephanie Stone, spokeswoman for the academy. The bonds had originally been scheduled to price Thursday.

The bonds (A2) will be sold on a negotiated basis with JPMorgan as the senior manager.

The offering includes $95.605 million in series 2008A bonds, $60.165 million in series 2008B bonds, $48.29 million in series 2008C bonds, $34.52 million in series 2008D bonds, $24.655 million in series 2008E bonds and $24.655 million in series 2008F bonds.

Proceeds will be used for refunding the academy's series 2003A, 2005A and 2005B bonds and to fund capital projects. The rest will be used for working capital.

Eastern Municipal deal ahead

Also, the Eastern Municipal Water District in California intends to sell $218.9 million in series 2008 water and sewer revenue and revenue refunding variable-rate certificates of participation, said a sellside source close to the sale.

"We're set to go on Tuesday," he said. "That could change with the way the market has been."

The bonds (Aa3/AA/AA) will be sold on a negotiated basis with Citigroup Global Markets as the senior manager for the series 2008D and 2008F certificates and Banc of America Securities LLC as the lead manager for the series 2008E and 2008G certificates.

The sale includes $54.785 million in series 2008D revenue refunding COPs, $64.115 million in series 2008E revenue refunding COPs, $50 million in series 2008F revenue COPs and $50 million in series 2008G revenue COPs.

The district also intends to price $120 million in series 2008H water and sewer revenue COPs (Aa3/AA/AA) on Aug. 14.

Those COPs will also be sold on a negotiated basis with Citigroup Global Markets as the lead manager, and the proceeds will be used for capital improvements.

Proceeds from the 2008D and 2008E COPs will be used to refund the district's series 1998A, 2003A and 2003B COPs. The remaining proceeds will be used for construction, acquisition and design related to capital improvements to the district's water and sewer system.

Los Angeles sale coming

A bit further ahead, the city of Los Angeles intends to sell $101 million in series 2008A general obligation bonds on Aug. 6, said a preliminary official statement released Friday.

The bonds will be sold on a competitive basis.

Proceeds will be used to clean up polluted storm water; keep pollution, trash, toxic chemicals and dangerous bacteria out of rivers and beaches; protect groundwater, bays, rivers and lakes from storm water contamination; and reduce flooding.

Hayward U.S.D.'s G.O. bonds

Looking ahead, the Hayward Unified School District in California intends to price $100 million general obligation bonds through a competitive sale on July 31, according to a sale notice.

The series 2008 bonds (/AA-/) have maturities in 2009, 2010 and 2021 through 2033.

Government Financial Strategies is the district's financial adviser.

Proceeds will be used to acquire and renovate school facilities.

In other upcoming education offerings, the Austin Community College District Public Facility Corp. in Texas plans to price $119.425 million lease revenue bonds for the Round Rock Campus, according to a preliminary official statement.

The series 2008 bonds (Aa3/AA/) have serial maturities from 2010 through 2033.

Wachovia Bank NA, is the senior manager of the negotiated sale.

Proceeds will be used to acquire, construct and equip the campus.

Franklin, Ohio, to price $186.7 million

Franklin, Ohio, intends to price $186.7 million refunding revenue bonds for OhioHealth Corp., according to a preliminary official statement.

The series 2008A bonds (/AA/AA) will price initially with a weekly interest rate.

The bonds are due Nov. 15, 2033.

Citigroup Global Markets will manage the negotiated sale.

Proceeds will be used to refund outstanding debt.

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