Issuers continue to bid on their own bonds; D.C. Water & Sewer will price $310 million bonds

By Cristal Cody and Sheri Kasprzak

New York, April 7 - The week kicked off with several municipal issuers once again announcing plans to bid on their own auction-rate securities.

Meanwhile, other issuers announced new issue bonds in an effort to refund or replace existing auction-rate bonds.

Heading up the auction-bid action was the Baylor Health Care System of Texas with word that it will bid on $54.5 million in bonds this week. The bonds were priced through the North Central Texas Health Facilities Development Corp.

The system intends to bid on $30.425 million in series 2001C bonds on Wednesday and $24.075 million in series 2001B bonds on Thursday.

Goldman, Sachs & Co. is the remarketing agent.

Elsewhere, the Rockingham Memorial Hospital of Virginia plans to bid on $50 million in series 2007 auction-rate hospital facilities revenue bonds, according to a bid notice.

The bonds were sold through the Industrial Development Authority of the City of Harrisonburg, Va. on April 4, 2007.

The next auction is April 8.

The authority plans to submit an order to hold its $19.45 million of bonds it owns from the April 1 auction and will make a bid for all of the outstanding bonds at a 1.89% rate.

"The corporation expects to purchase any bonds allocated to the corporation in the April 1, 2008 auction with funds of the corporation or with proceeds of indebtedness incurred pursuant to a loan agreement with SunTrust Bank," the notice said.

In other auction news, Citizens Property Insurance Corp. in Jacksonville, Fla., released details of its 3.7% interest rate auction bids on $300 million high risk account senior secured bonds.

The company now owns $235.075 million of the outstanding bonds after the auctions held Thursday.

Citizens Property Insurance bid on $100 million series 2006A7 bonds and now owns $70.4 million of the bonds.

The bonds received the low bid of 3.7% and a high bid of 11.17%.

Citizens Property Insurance also submitted bids on $100 million series 2004I bonds and now owns $80.7 million of the bonds.

The bonds had a low bid of 3.7% and a high bid of 10.97%.

The company also successfully bid on $83.975 million of the $100 million series 2006A8 bonds.

The bonds had the low bid of 3.7% and a high bid of 11.1%.

The company intends to bid at least 3.72% in the upcoming auctions on Thursday for the remainder of the series 2006A7 and 2006A8 bonds available, according to a notice released Monday.

Pricing details

Issuers started the week off with at least one sizable deal.

Georgia Tech Facilities Inc. priced $66.655 million refunding revenue bonds with a 1.65% initial interest rate on Monday, a sell-side source told Prospect News.

The $32.895 million series 2008A and $33.76 million series 2008B bonds priced with a weekly variable rate.

The bonds (Aaa/VMIG 1//) were sold through the Development Authority of Fulton County, Ga.

The series 2008A bonds are due May 1, 2037 and the series 2008B bonds are due June 1, 2032.

Georgia Tech Facilities also plans to price $9.4 million series 2008C bonds (Aa1/VMIG 1) and $18.495 million series 2008D bonds (Aaa/VMIG 1//) by the week of April 21, a source said.

UBS Securities LLC is managing the bond sales.

Proceeds will be used to refund the series 2005A bonds.

Elsewhere in pricing action, the Intermountain Power Agency of Utah had intended to price $397 million in series 2008A subordinated power supply revenue bonds (A1//AA-) on a competitive basis.

The issuer did not immediately return calls for the pricing details by press time Monday.

The proceeds will be used to refund the agency's series 1998A, 2004A, 2006A and 2006B auction-rate bonds.

In other pricing news, Clark University in Massachusetts was expected to price $50.3 million variable-rate bonds on Monday.

The series 2008 bonds (Aaa//) were to price in a weekly mode through the Massachusetts Development Finance Agency.

UBS Investment Bank will manage the negotiated sale.

Proceeds will be used to refund series 2000, 2002A and 2002B bonds, pay the termination fee on a swap for the series 2002A bonds and fund renovations of the Goddard Library.

D.C. Water & Sewer to price $310 million

Issuers weren't shy about announcing new municipal deals on Monday, indicating April will continue with a heavy sales calendar.

Heading up pricing activity the week of April 7 is a $310 million sale of series 2008A public utility subordinated-lien revenue refunding bonds from the District of Columbia Water & Sewer Authority. Those bonds (A1/AA-/AA-) will be sold Wednesday, said the authority's treasurer Robert Hunt.

The bonds will be sold on a negotiated basis through lead manager Bear, Stearns & Co., Hunt said.

Proceeds from this offering will be used refund the authority's series 2004 auction-rate subordinate-lien taxable revenue bonds, Hunt confirmed.

"We have two [auction-rate] issuances - $295 million in series 2007B [bonds] and $59 million in series 2004B [bonds]," Hunt said. "We're going to be refunding both series, this one this week and another within the next week."

No additional details were available about the second offering, which will refund the series 2007B bonds.

In other upcoming sales, the New Jersey Turnpike Authority plans to price $325 million in series 2008 subordinated turnpike revenue notes, said Dennis Enright of NW Financial, the authority's financial advisor.

No pricing date has been set, said Enright.

The bonds (MIG1//) will replace $175 million in XL-insured series 2003D auction-rate bonds, Enright told Prospect News.

Enright declined to comment on whether the decision to replace the XL-insured bonds coincides with Fitch's recent downgrade of the bond insurer.

The bonds will be sold on a competitive basis.

Florida plans to price $99.685 million Everglades restoration revenue refunding bonds, down from an initial amount of $110 million.

The Department of Environmental Protection series 2008A bonds will be sold in a competitive sale. The state prices bonds on an 18-hour notice.

The bonds have preliminary maturities from July 1, 2008 through July 1, 2025.

Proceeds will be used to refinance the outstanding series 2006A and B multi-modal Everglades restoration revenue bonds and to fund a reserve account.

Eastern Michigan University's bond sale

Eastern Michigan University plans to price $125.795 million general revenue variable-rate demand refunding bonds, according to an official statement released Monday.

The series 2008 bonds (Aaa/AAA/) are due June 1, 2036.

PiperJaffray is the underwriter.

Proceeds will be used to pay the costs of refunding outstanding obligations of the university's board of regents.

The pricing date could not be confirmed by press time.

The Detroit Edison Co. plans to price $68.5 million variable-rate limited obligation refunding revenue bonds, according to an official statement released Monday.

The series 2008DT bonds are due Dec. 1, 2036 and initially will bear interest at the weekly rate.

The bonds will price through the Michigan Strategic Fund.

KeyBanc Capital Markets will manage the negotiated sale.

Additional pricing terms were not available by press time.

Citizens Property Insurance Corp. intends to price $1.5 billion series 2008A high risk account senior secured bonds on April 28, according to a release from Moody's Investors Service.

Moody's upgraded the bonds to an A2 from A3.

The refinancing is to move some of the company's liquidity reserves away from the auction rate market. The company has $3.8 billion outstanding auction-rate securities.

Ohio expects to price $140 million general obligation highway capital improvements bonds, according to a preliminary official statement released Monday.

The series L Buckeye Savers program bonds (Aa1/AAA/AA+) have maturities from 2009 through 2018.

The pricing date could not be determined by press time, but delivery is expected by May.

Merrill Lynch & Co. is the senior underwriter. Co-managers are Fifth Third Securities Inc.; Butler, Wick & Co.; Goldman, Sachs & Co.; The Huntington Investment Co.; JPMorgan; Morgan Stanley and NatCity Investments.

Proceeds will be used to fund highway capital improvement projects.

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