California seals $4 billion sale early; Houston sells $476 million revenue refunding bonds with 5.6% TIC

By Aaron Hochman-Zimmerman and Sheri Kasprzak

New York, March 24 - The State of California grabbed municipals headlines Tuesday when it completed its $4 billion sale of general obligation bonds a day early - and sold the majority of the bonds to retail investors.

"It is interesting that they managed to get the majority done through retail," said one trader reached Tuesday afternoon.

"It says a lot about retail appetite and what those investors are looking for."

The trader also said he's heard rumors that the state may upsize the offering by as much as $2 billion.

"I don't have any official information, just some things I've heard around."

The state sold $3.2 billion to retail investors. The bonds are due 2013 to 2029 with a term bond due 2036. The yields range from 3.25% to 6%.

Merrill Lynch & Co. Inc. and Citigroup Global Markets Inc. were the senior managers.

"For comparison purposes, in the last G.O. sale we completed in June 2008, the yields ranged from 1.75% to 5.3%," said Tom Dresslar, spokesman for the treasurer's office.

Proceeds will be used to restart the state's infrastructure program.

No problem, Houston prices

In other primary market news, the City of Houston priced $476 million in series 2009A first-lien combined utility system revenue and refunding bonds, according to Janice Evans-Davis, director of communications.

The bonds priced with a true interest cost of 5.598538%.

Piper Jaffray & Co. acted as the lead underwriter for the negotiated deal.

The bonds carry serial maturities from Nov. 15, 2009 through Nov. 15, 2029 with term bonds due in 2033 and 2038.

Proceeds will be used to refund and defease $300 million in outstanding series A commercial paper notes and series 2008D2 first-lien revenue refunding bonds.

Ohio water authority deal

Elsewhere in Tuesday's pricing activity, Morgan Stanley & Co. brought $122.205 million in series 2009A fresh water revenue bonds for the Ohio Water Development Authority, said Scott Campbell, chief operating officer of the authority.

The bonds (Aaa/AAA/) are due 2009 to 2016 with coupons from 2% to 5% and yields from 1.09% to 8.7%.

Proceeds will be used to refund the authority's series 1998 fresh water bonds.

Also on Tuesday, the City of Las Vegas sold $105 million in series 2009 limited tax G.O. performing center revenue bonds Tuesday, said Jace Radke, spokesman for the city.

The bonds (/AA/) were sold on a competitive basis with Merrill Lynch winning the bid with a 5.83% TIC. Nevada State Bank Public Finance was the financial adviser.

The bonds are due 2012 to 2039 with coupons ranging from 5% to 6% and yields from 2.53% to 6.1%.

"It went very well," Radke told Prospect News. "Last week, we were able to sell $85 million in redevelopment agency bonds and this week, we sold the G.O.s, which are very important for a bunch of projects we have going on downtown, including our new performing arts center."

Proceeds will be used to construct, equip and maintain the city's performing arts center.

Howard County prices

Howard County in Maryland priced $93.525 million in series 2009 G.O. bonds (Aaa/AAA/AAA), according to Rafiu Ighile, county comptroller.

Citigroup won the auction with a 3.914321% TIC. Ten other bidders participated.

Public Financial Management Inc. acted as financial adviser.

The bonds were split into two tranches, both with maturities from 2010 to 2029.

The county sold $68.565 million in series 2009A consolidated public improvement bonds and $24.96 million in series 2009A metropolitan district bonds.

Proceeds will be used to repay $86 million in notes and pay for water and sewer capital projects.

The Howard County seat is located in Ellicott City, Md.

Alpine School District

Out west, the Board of Education of Alpine School District in Utah priced $68 million series 2009 Utah School Bond Guaranty Program G.O. school building bonds (Aaa//), according to Greg Holbrook, director of accounting.

"We had a real strong showing with it," Holbrook said.

Wachovia Bank won the auction for the competitively sold bonds with a 4.0721732% TIC. Zions Bank Public Finance acted as financial adviser.

The bonds carry serial maturities from 2010 to 2027.

Proceeds will be used for school projects.

The school district has headquarters in American Fork, Utah.

Waukee eyes $50 million

Looking to upcoming sales, the Waukee Community School District in Iowa plans to issue $50 million series 2009 G.O. bonds (Aa3//) on April 14, according to an offering statement.

Piper Jaffray & Co. will act as financial adviser for the competitive offer.

The bonds will carry maturities from 2010 to 2028.

Proceeds will be used for the construction and maintenance of school facilities.

Also looking ahead, Emory University in Atlanta plans to price $250 million in series 2009A taxable bonds, said a preliminary official statement.

The bonds (Aa2/AA/) will be sold on a negotiated basis. The lead manager is J.P. Morgan Securities Inc.

The bonds are due Sept. 1, 2019.

Proceeds will be used to pay for capital expenses and reimburse the university for capital expenditures.

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