Los Angeles prices $977.6 million in TRANs; refunding action picks up as issuers seek fixed rates

By Cristal Cody and Sheri Kasprzak

New York, July 8 - Market action picked up on Tuesday with several large offerings pricing. Also, some market insiders indicated that more and more issuers may be looking to refunding bonds to rid themselves of shaky variable-rate offerings.

"I'm sure a lot of issuers are in that boat where they have variable-rate or auction-rate bonds and they're looking for a fixed rate," said one market source.

"It's not the best environment right now for variable-rate offerings, so refunding to a fixed rate is really a smart move."

Miami-Dade County in Florida is among the issuers seeking out such a deal.

Rachel Baum, the county's chief financial officer, said a downgrade for the insurer of its series 1994 variable-rate bonds sparked the decision to sell $439 million in water and sewer refunding bonds.

"As the insurer has been downgraded, the bonds were trading at a very high interest rate," Baum said in an interview Tuesday morning.

"As such, we had no choice but to refund the bonds into another mode. We decided to refund these bonds into a fixed-rate mode with FSA as the insurer."

FGIC was the insurer for the 1994 bonds.

Miami-Dade plans to sell its bonds (A1/A+/) on a negotiated basis with RBC Capital Markets as the senior manager. The bonds are due 2008 to 2022.

Los Angeles sells $977.6 million

Meanwhile, pricing activity was led by a $977.6 million sale of series 2008 tax and revenue anticipation notes (MIG1/SP-1+/F1+) from Los Angeles, Calif.

According to a pricing sheet the issuer released, the TRANs (MIG1/SP-1+/F1+), which are due June 30, 2009, were sold in several subseries with several true interest costs.

Goldman, Sachs & Co. was the winning bidder for $140 million and $20 million of the notes, with 1.54583% and 1.54686% TICs, respectively. Citigroup Global Markets won $50 million of the notes with a 1.54789% TIC, and Lehman Brothers won $70 million with a 1.54894% TIC. JPMorgan Securities won $200 million of the notes with a 1.54997% TIC, and Banc of America Securities won $50 million of the notes with a 1.55026% TIC. Banc of America also won a $25 million portion of the notes with a 1.55303% TIC. Zions First National Bank won $10 million of the notes with a 1.55516% TIC, and Citigroup won $412.6 million with a 1.5562% TIC.

The 3% notes were priced at par.

The proceeds will be used for expenses until taxes and other revenues are collected.

Harris County's TANs price

In another fairly large offering, Harris County, Texas, priced $395 million in series 2008 tax anticipation notes Tuesday, said a source close to the sale.

"We had about 15 bidders, so we're very pleased with the response," said the source. "We're happy with the results."

Citigroup Global Markets was the winning bidder for $20 million of the notes with a 1.55866% TIC, and Goldman, Sachs & Co. was the winning bidder for $375 million of the notes with a 1.5669% TIC.

The notes (MIG1/SP-1+/F1+) are due Feb. 26, 2009, have a 3% coupon and priced at par.

Proceeds will be used to fund the seasonal general fund cash flow deficit for the current fiscal year ending Feb. 28, 2009 before the collection of taxes.

Florida DOE prices $200 million

The Florida Department of Education priced $200 million full faith and credit public education capital outlay bonds with a 4.6526% TIC on Tuesday, the state told Prospect News.

The series 2006E bonds (Aa1/AAA/AA+) priced with 4% to 5% coupons to yield 1.8% to 4.72% for the serial maturities from 2009 through 2030, said Carol Bagley, bond development supervisor for Florida's bond finance division.

The bonds were authorized by the state in 2006.

Terms due in 2035 and 2038 priced with 5% coupons to yield 4.73% to 4.76%.

Merrill Lynch & Co. was the winning bidder out of eight bidders in the competitive sale.

Proceeds will be used for capital school projects.

Broward bonds price at 1.45%

Broward County in Florida priced $46.145 million Port Everglades variable-rate bonds with a 1.45% initial rate on Tuesday, said Mike Geoghegan, chief financial officer.

"We probably got a little lucky," he said on the low initial rate. "But treasury rates are down, so yields are down. There seems to be a larger market this week than last week."

The county executed a swap on Monday with Goldman, Sachs & Co. for a fixed rate of 3.62% and an all-in fixed rate of 4.452%, Geoghegan said.

The 4.452% rate is about 60 basis points lower than a previous swap rate, he said.

The series 2008 bonds will reset every seven days. The bonds were not rated.

The bonds were refunded to eliminate the insurance from Ambac Financial Group.

U of Louisville bonds price

The University of Louisville in Kentucky priced $86.145 million general receipts bonds with a 4.36808% net interest cost on Tuesday, a source familiar with the sale told Prospect News.

The series 2008A bonds (Aa3/AA-/) priced with 4% to 4.5% coupons. The yields were not released.

The bonds have serial maturities from 2009 through 2028.

BB&T Capital Markets won the bidding out of nine bids in the competitive sale.

Proceeds will be used for projects that include a new parking garage and renovation of the School of Dentistry building.

Sacramento County TRANs

Sacramento County in California planned to price $440 million tax and revenue anticipation notes in a competitive sale on Tuesday.

The series 2008A notes (MIG 1) were sold to fund the county's mid-year cash flow needs.

Elsewhere, San Antonio, Texas, also was expected to price $135 million hotel occupancy tax subordinate lien variable-rate demand revenue and refunding bonds on Tuesday.

The series 2008 bonds will price with an initial weekly interest rate.

The bonds are due Aug. 15, 2034.

Wachovia Bank, NA, managed the negotiated sale.

Proceeds will be used to refund the outstanding series 2004B hotel occupancy tax revenue and refunding bonds and for renovations to the Lila Cockrell Theatre, including Americans with Disabilities Act compliance improvements.

Calls for additional information were not returned by press time.

Florida lottery revenue

Heading up upcoming offerings, the Florida Board of Education intends to price $200 million lottery revenue bonds in July, according to a sale notice.

The earliest date the series 2008B bonds may be sold is Thursday, but a source with the state said the sale probably would be later in the month.

Florida sells bonds competitively on an 18-hour notice.

Oklahoma authority to price bonds

The Oklahoma Development Finance Authority expects to price $222.67 million health system revenue and refunding bonds for Integris Health on July 17, a sellside source said Tuesday.

The $105.97 million series 2008B and $116.7 million series 2008C bonds will price for Integris Baptist Medical Center, Integris South Oklahoma City Hospital and Integris Rural Health.

The bonds have maturities from 2009 through 2014.

Goldman, Sachs & Co. is the senior manager of the negotiated sale.

Proceeds will be used to finance or refinance acquisitions and capital improvements and to refund $32.7 million of the $37.165 million outstanding from the series 1995D revenue refunding bonds and $117.3 million of the $118 million outstanding from the series 1999B variable-rate revenue refunding bonds.

In other upcoming sales, Cook County, Ill., plans to price $150 million sales tax anticipation notes on Wednesday, according to Moody's Investors Service.

The series 2008 notes (MIG1) are due Aug. 3, 2009.

Additional information was not immediately available.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.