Market firms a bit as primary action takes off; Illinois State Toll Highway sells $500 million

By Aaron Hochman-Zimmerman and Sheri Kasprzak

New York, May 12 - Despite the heaviest day of a light week for primary activity, the municipals market was slightly firmer, a sellside source told Prospect News Tuesday.

"We're a bit better today, mostly pushed by the Build America Bonds in the market today," the market source said.

"Every time you get these [Build America Bonds], the market improves a bit. We're not better by a significant amount, but considering Treasuries are all over the place today, we look pretty stable to a little better."

The biggest offering of the day came from the Illinois State Toll Highway Authority, which priced $500 million in series 2009 toll highway senior priority revenue bonds.

The bonds (Aa3/AA-/) were sold through Goldman, Sachs & Co. and Morgan Stanley & Co. Inc.

The sale included $100 million in 2009A bonds, which are due 2024, and $400 million in 2009B bonds, which are due 2034. The 2024 bonds have a 5.293% coupon, priced at par, and the 2034 bonds have a 6.184% coupon, also priced at par, said Joelle McGinnis, spokeswoman for the authority.

The true interest cost is 3.440% for the 2024 bonds and 4.020% for the 2034 bonds.

"We're pleased with the results of the transaction today," Michael Colsch, chief of finance for the authority, said in a statement.

"The net cost of borrowing to the Illinois Tollway at less than 4% compares favorably with traditional tax-exempt bonds."

The offering will fund the authority's infrastructure improvement program.

Braintree brings $122 million

Elsewhere in primary action from Tuesday, the Town of Braintree in Massachusetts sold $122 million in series 2009 general obligation bonds, said a sellside source who saw the offering terms Tuesday.

The bonds (Aa3/AA-/) were sold through lead manager Barclays Capital Inc.

The bonds are due 2010 to 2029 with coupons from 4% to 5% and yields from 1.25% to 4.52%.

Proceeds will be used for capital improvements.

Also on Tuesday, the Massachusetts Development Finance Agency brought $95.740 million in series 2009 revenue bonds (Aa3/AA-/) for Boston College, said a sellside source who saw the terms.

The sale included $71.125 million in series 2009Q-1 bonds and $24.615 million in series 2009Q-2 bonds.

The 2009Q-1 bonds are due 2010 to 2029 with coupons from 3% to 5% and yields from 0.78% to 4.45%. The 2009Q-2 bonds are due 2010 to 2029 with coupons from 3% to 5% and yields from 0.78% to 4.45%.

Barclays was the lead manager, and Public Financial Management Inc. was the financial adviser.

Proceeds will be used to refinance existing debt.

The agency is based in Boston, and the college is based in Chestnut Hill, Mass.

Demon Deacons price

In other higher-education bonds, the North Carolina Capital Facilities Finance Agency priced $110 million series 2009 education facilities revenue bonds at a TIC of 4.770108% (Aa3/AA/), according to agency spokeswoman Heather Franco.

The bonds were priced on behalf of Wake Forest University.

The $38.940 million serial bonds carry serial maturities from 2025 to 2031. A $60.570 million term bond carries maturities from 2032 to 2038, and one $10.490 million bond has a serial maturity in 2039.

Wachovia Securities and BB&T Capital Markets Corp. acted as underwriters for the negotiated deal.

Proceeds will be used to refinance the Wachovia Bank line of credit and renovate the university's football stadium.

The agency is located in Raleigh, N.C., and the university is based in Winston-Salem, N.C.

Van Buren sale

In other primary market news, the Van Buren Public Schools of Belleville, Mich., priced $79.040 million in series 2009 unlimited tax G.O. Build America Bonds Tuesday, said a sellside source familiar with the deal.

The bonds (Aa3/AA-/) were sold through senior manager Raymond James & Associates Inc.

The bonds are due 2010 to 2039 and have coupons from 1.64% to 6.58%, all priced at par.

Proceeds will be used to construct new school facilities.

Illinois plans $1 billion

Coming up later this week, the State of Illinois is expected to bring to market $1 billion in series 2009 G.O. certificates, said a notice of sale. The pricing is scheduled for Thursday.

The certificates will be sold on a competitive basis with Scott Balice Strategies as the financial adviser.

Half of the certificates are due April 26, 2010 and the other half on May 20, 2010.

Proceeds will be deposited to the state's general fund to relieve cash flow pressures.

Secondary slightly better

Moving to the secondary market, a trader said the market was slightly better but mostly unchanged with fairly light volume.

"In terms of volume, we're pretty light," the trader said. "It's been really kind of quiet all week."

Among the bonds moving Tuesday was the Sacramento Municipal Utility District's series 2009V revenue bonds. The 6.322% 2036 bonds were seen at 5.973% late Tuesday. The bonds priced at par May 5.

Elsewhere, the Ohio Turnpike Commission's recently priced series 2009A revenue refunding bonds were moving. The 4.375% 2024 bonds were trading at 4.153%. The bonds priced May 4 at 4.400%.

In other trades, the capital improvement bonds from Johnston County, N.C., were trading as well. The 4.125% 2026 bonds were seen at 3.935% after pricing at 4.200%. The 4.250% 2028 bonds were seen at 4.150% after pricing May 5 at 4.370%. The 3% 2012 bonds were seen at 1.334% after pricing at 1.430%.

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