Yields cheapen on the short end; Illinois Finance prices $135.97 million for Alexian Brothers

By Sheri Kasprzak

New York, April 7 - The short end of the muni yield curve continued to struggle with weakness Wednesday, with yields seen higher by 1 or 2 basis points. The rest of the yield curve remained fairly flat, a trader reported.

"Short bonds are up by 1 or 2 [bps]," said the trader.

"The rest is mostly unchanged. We've seen good demand [for secondary]. Trading has been pretty active today."

Amid the trading, the Greater Orlando Aviation Authority's series 2010B refunding bonds were moving. The 4.25% 2018 bonds were trading at 4.136%.

Elsewhere, the State of Illinois' recently priced series 2010-2 Build America Bonds were trading. The 6.9% 2035 bonds were seen at 6.65% after pricing Tuesday at par.

Illinois Finance sells bonds

Meanwhile, heavy primary activity dominated the market, led by a $135.97 million sale of series 2010 revenue bonds from the Illinois Finance Authority. The bonds (A3//A-) were sold for Alexian Brothers Health System.

Bank of America Merrill Lynch was the senior manager.

The bonds are due 2011 to 2022 with term bonds due 2025 and 2030. The serial coupons range from 3% to 5%. The 2025 bonds have a 5.125% coupon, priced at 98.614. The 2030 bonds have a 5.25% coupon, priced at 97.35.

Proceeds will be used to reimburse the health system for costs associated with upgrading St. Alexius Medical Center in Chicago as well as other upgrades made to Alexian Brothers hospitals. The remainder will be used to refund existing debt.

The authority, based in Chicago, provides loans to nonprofit organizations, businesses, agriculture operations and local governments throughout the state. Alexian Brothers, based in Addison, Ill., is a health-care network operated by the Congregation of Alexian Brothers, an apostolic Catholic order.

Rhode Island prices $78.6 million

Also on Wednesday, the State of Rhode Island and Providence Plantations priced $78.6 million in series 2010A consolidated capital development loan general obligation bonds, said a pricing sheet.

The bonds (Aa3//AA) were sold through Bank of America Merrill Lynch and Janney Montgomery Scott LLC.

The bonds are due 2011 to 2020 with 2.5% to 5% coupons. The yields were not immediately available.

Proceeds will be used to refund existing bonds.

Tallahassee brings $77.85 million

Down South, the City of Tallahassee in Florida brought $77.845 million in series 2010 energy system revenue refunding bonds, said a pricing sheet. The deal was downsized from $115.64 million.

The bonds (Aa3/AA/AA-) were sold through Bank of America Merrill Lynch.

The bonds are due 2016 to 2028 with coupons from 3% to 5%.

Proceeds will be used to refund all or a portion of the city's outstanding energy system revenue bonds and to refund its series 1998A and 1998B bonds.

Indiana University bonds price

In other primary news, Indiana University priced $67.4 million in series 2010T student fee bonds Wednesday, according to a pricing sheet.

The bonds (Aa1/AA/) were sold on a negotiated basis with Morgan Stanley & Co. Inc. as the lead manager.

The offer included $16.01 million in series 2010T-1 tax-exempt bonds and $51.39 million in series 2010T-2 Build America Bonds.

The 2010T-1 bonds are due 2010 to 2015 with coupons from 1% to 5%.

The 2010T-2 bonds are due 2016 to 2024 with a term bond due 2029. The serial coupons range from 3.827% to 5.477%, all priced at par, and the 2029 bonds have a 6.136% coupon, also priced at par.

Proceeds will be used to fund campus improvements.

The university is based in Bloomington, Ind.

Cleveland sells $65 million

On Wednesday, the City of Cleveland sold $65 million in series 2010A refunding certificates of participation, said a pricing sheet.

The COPs (Baa1/A/) were sold through Bank of America Merrill Lynch and Wells Fargo Bank NA.

The bonds are due 2010 to 2020 with coupons from 2% to 5%.

Proceeds will be used to refund COPs issued to fund the construction of Cleveland Stadium.

UCal bonds ahead

Looking to upcoming sales, the State Public Works Board of the State of California is set to price $499.935 million in series 2010 lease revenue bonds, said a preliminary official statement. The bonds will be sold for the University of California.

The offering includes $180.705 million in series 2010B bonds, $219.015 million in series 2010C bonds and $50.215 million in series 2010D bonds.

The bonds (A1/BBB+/BBB+) will be sold through RBC Capital Markets Corp. and Southwest Securities Inc.

Proceeds will be used to fund a variety of capital projects at University of California campuses.

The board, based in Sacramento, oversees fiscal matters associated with construction projects throughout the state.

Ohio highway sale planned

Also ahead, the State of Ohio is set to price $170 million in series 2010 G.O. highway capital improvement bonds, said a preliminary official statement.

The deal includes $165 million in series M Build America Bonds and $5 million in series N tax-exempt bonds.

Morgan Stanley is the senior manager.

The M bonds (Aa2/AAA/AA+) are due 2018 to 2025. The N bonds (Aa2/AAA/AA+) are due 2018 to 2025.

Proceeds will be used to fund improvements to state highways.

North Carolina Medical to sell Duke bonds

In other upcoming deals, the North Carolina Medical Care Commission expected to sell $120 million in series 2010A health-care facilities revenue bonds, said a preliminary official statement. The bonds will be issued for Duke University Health System.

The bonds (Aa2/AA/AA) will be sold on a negotiated basis with Citigroup Global Markets Inc. as the senior manager.

Proceeds from the deal will be used to fund the cost of additional health-care facilities.

Based in Cary, N.C., the commission adopts, recommends and rescinds rules for most health-care facilities within the state as well as provides funding for the facilities.

Duke University Health is based in Durham, N.C.

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