Delaware prices upsized $236 million G.O.s with lowest TIC ever; Fairfax County sells $58.3 million

By Aaron Hochman-Zimmerman and Sheri Kasprzak

New York, Jan. 14 - Wednesday proved to be another stellar day for issuers, with the State of Delaware pricing an upsized offering of general obligation bonds at its lowest true interest cost ever for that type of bond. The secondary market faired just as well, with volume improving and the tone of the market much improved.

"Looks like we've just hit a window this week where it's a good time to price," said one sellside source reached Wednesday afternoon.

"There's good institutional appetite, retail is even looking a bit more interested, so it's good for everyone. Issuers are lining up to get these deals done quickly. Next week seems to taper off, from what I've seen."

In the Delaware sale, the state sold $236 million in series 2009 G.O.s, upsized from $225 million, said Stephanie Scola, the state's director of bond finance.

"As a result of the favorable bid, the state exercised its option to increase the size of the transaction by [up to] 10% to $236 million," Scola said.

The bonds (Aaa/AAA/AAA) were sold competitively, and Merrill Lynch & Co. won the bid with a 2.65% TIC.

"The state is very pleased with the result of the sale," a sellside source connected to the deal said Wednesday afternoon.

"They were able to capture a TIC that is the lowest in state history for a loan of this size and duration."

The bonds are due 2010 to 2026, but the full coupons and yields were not immediately available Wednesday evening.

Proceeds will be used for capital projects.

Fairfax brings $257.8 million

In other pricing news, Virginia's Fairfax County sold another $58.3 million in series 2009 competitive G.O. bonds (Aaa//AAA), according to the county's debt manager, Len Wales.

The serial bonds priced with a TIC of 1.46% and carry maturities from 2009 to 2014.

Citigroup acted as the underwriter.

Wednesday's sale came after Tuesday's competitive pricing of $199.5 million in series 2009 G.O. bonds, which priced with a TIC of 3.56%.

The sale went "very well," Wales said of the $199.5 million offer, "actually better than we expected."

"We hit the market at the right time," he said.

Barclays came in with the winning bid for Tuesday's sale.

Proceeds will be used for school improvement projects and refunding series 1999A G.O. bonds.

In other news, the New York State Mortgage Agency said Wednesday that it did price $80 million in homeowner mortgage revenue bonds (Aa1) through lead manager Citigroup Global Markets. However, the pricing data was not immediately available. A source at the issuer said the terms may be available Thursday.

The sale included $11.56 million in series 160 fixed-rate non-AMT bonds, $41.94 million in series 161 fixed-rate non-AMT bonds and $26.5 million in series 162 variable-rate non-AMT bonds.

Proceeds will pay for mortgage loans.

Thursday's action lines up

Moving to upcoming sales for Thursday, the pricing activity continues to be hot with several larger sales on the calendar.

Action will be led by a $317.14 million sale of series 2009A turnpike subordinate revenue bonds from the Pennsylvania Turnpike Commission. Those bonds will be sold through senior manager Citigroup Global Markets and are due 2010 to 2024 with term bonds due 2029 and 2039.

Proceeds will be used to make grants to mass transit agencies for highway, road and bridge work.

The Long Island Power Authority out of New York is planning a sale for Thursday as well. The authority is gearing up to bring $250 million in series 2009A electric system general revenue bonds (//A-) with Morgan Stanley & Co. as lead manager.

The authority plans to use proceeds to refund bonds and pay for capital expenses.

Elsewhere, the State of Ohio plans to sell $138.245 million in series 2009 G.O.s (Aa1/AA+/AA+) with Merrill Lynch and Fifth Third Securities at the helm.

That sale includes $56.995 million in series 2009A higher education G.O. refunding bonds, $31.81 million in series 2009A common schools G.O. refunding bonds and $49.44 million in series 2009A infrastructure improvement G.O. refunding bonds.

The proceeds will refund bonds originally used for higher education, common schools and infrastructure improvement.

Connecticut's refunding bonds

In deals coming up later this month, the State of Connecticut announced plans to price $420 million in series 2009-1 second0lien special tax obligation refunding bonds for transportation infrastructure purposes.

The bonds will be sold on a negotiated basis with Goldman, Sachs & Co. and Banc of America Securities LLC as the senior managers, according to a preliminary official statement.

The bonds are due 2010 to 2022.

Proceeds will be used for transportation infrastructure programs throughout the state.

Secondary activity heats up

Meanwhile, in the secondary market, traders said volume continued to improve Wednesday, with lots of interest in medium- to long-term bonds.

"It's really been a great week for us," said a trader reached Wednesday afternoon.

"We're moving stuff on the medium to long end, and we've been consistently up all week. The tone is nice and firm, and it's looking good."

Moving to specific trades, the State of Ohio's series 2008A certificates of participation saw some activity Wednesday with the 4.05% 2018s trading at 3.483%.

Elsewhere, Clark County, Nev.'s series 2008 G.O.s were trading. The 5% 2025s were seen at 4.851%.

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