Rand Corp. postpones revenue bond sale due to ratings delay; Waterbury, Conn.'s $320 million G.O. sale delayed

By Cristal Cody and Sheri Kasprzak

New York, May 22 - Backups in the ratings market seem to be delaying some new offerings, one issuer told Prospect News Thursday.

Rand Corp. pushed back the sale date of $93.565 million revenue bonds to June 2, a source connected to the deal said Thursday. The sale had originally been slated to take place Thursday.

"It was due to delays on the short-term ratings," the source said. "All the ratings agencies are tied up right now because everyone is trying to convert debt, with auction-rate securities in particular. They're being inundated."

The series 2008B bonds (Aaa/AAA/) will price through the California Infrastructure & Economic Development Bank with an initial weekly interest rate.

Banc of America Securities LLC is the manager of the negotiated sale.

Issuers are working with the ratings agencies for the earliest possible date to receive their short-term ratings, the source said.

Waterbury bonds delayed

In other delayed bond offerings, Waterbury, Conn., also experienced a delay in getting to the market to price $320 million taxable general obligation pension bonds.

The series 2008 bonds (Aaa//AAA) originally had been planned to price next week but instead will price on June 2, city finance director John Jedrzejczyk said.

"There were some delays on us getting out to the market," he said. "We felt we didn't have enough time out there to circulate the offering."

The bonds have serial maturities from 2009 through 2021 and a term bond in 2037.

The bonds are insured by Assured Guaranty Corp.

William Blair & Co. will manage the negotiated sale.

Proceeds will be used to finance a portion of the city's unfunded past pension benefit obligations for municipal employees.

Orange County Sanitation refinancing

Heading up pricing action Thursday, the Orange County Sanitation District in California priced $77.165 million refunding certificates of participation with a 2.715% true interest cost on Thursday, the issuer told Prospect News.

The series 2008A COPs (Aa3/AAA/AA) priced with 2.95% to 4% coupons, district controller Mike White said. The yields were not available.

The bonds have maturities from Aug. 1, 2008 through Aug. 1, 2013.

Lehman Brothers was the winning bidder in the competitive sale.

Proceeds will be used to refund $77.34 million of the district's outstanding series 1992 weekly interest refunding certificates, which have a synthetic fixed-rate mode and are insured by Ambac Financial Group.

UBS, the remarketing agent, had trouble selling the certificates, White said.

"On the $77 million outstanding, they couldn't sell $35 million of that any longer because of the Ambac insurance on it, so we were kind of forced to take action," he said. "They were going to take it back to the bank and that would have cost much more than to refinance."

Under that action, the district would have to pay an alternative floating rate, according to the swap agreement, he said.

The district also has $26.9 million in series 1993 variable-rate daily interest certificates that are insured by Ambac.

"They seem to be trading very well," White said. "They have a letter of credit so it's more palatable to the bondholder than a standby purchase agreement. The underlying insurance is more problematic with the standby purchase agreement [that is on the series 1992 certificates]."

Piedmont's $227.9 million sale

In other pricing news from Thursday, the Piedmont Municipal Power Agency of South Carolina priced $227.9 million in electric revenue bonds (Aaa/VMIG1//), said a source at the issuer.

The full terms of the sale were not immediately available.

The bonds were sold through negotiation with Goldman, Sachs & Co. as the lead manager.

The deal includes $107.9 million in series 2008B bonds, $90 million in series 2008C bonds and $30 million in series 2008D bonds.

Also, on Thursday, the Gwinnett Hospital System in Georgia had planned to sell $154.95 million in series 2008 Georgia revenue anticipation certificates (Aa2/VMIG1//). Calls to the issuer for the terms were not returned by press time.

The bonds were sold on a negotiated basis with SunTrust Bank as the lead manager for the 2008A and 2008B bonds and Wachovia Securities as the lead for the 2008C bonds. The 2008A bonds are due 2034, the 2008B bonds are due 2042 and the 2008C bonds are due 2032.

Proceeds will refund the hospital system's 2007E and 2007F certificates.

Massachusetts Water to price $1.16 billion

The Massachusetts Water Resources Authority expects to price $1.162 billion multi-modal bonds on May 29, a source with the issuer said Thursday.

The sale includes $337.96 million series 2008A bonds due Aug. 1, 2037; $124.58 million series 2008B bonds due Aug. 1, 2031; $199.375 million series 2008C bonds due Nov. 1, 2026; $83.6 million series 2008D bonds due Aug. 1, 2011; $224.74 million series 2008E bonds due Aug. 1, 2037; and $191.69 million series 2008F bonds due Aug. 1, 2029.

The subordinated general revenue refunding bonds initially will price with a weekly rate.

Citigroup Global Markets will manage the negotiated sale of the series 2008A bonds; Lehman Brothers will manage the series 2008B bonds; JPMorgan will manage the series 2008C and 2008D bonds; Morgan Stanley will manage the series 2008E bonds; and Goldman, Sachs & Co. will manage the series 2008F bonds.

Proceeds will be used to refund the authority's outstanding subordinated bonds.

Bay Area authority to price bonds

Looking to upcoming bond sales, the Bay Area Toll Authority of California plans to price $507.9 million in series 2008 variable-rate demand bonds on June 4, a sellside source familiar with the sale confirmed Thursday.

"We're not particularly concerned," the sellsider said when asked if he feels the current market conditions will make selling these bonds difficult. "We think there will be substantial interest in these bonds."

The bonds (Aa3/VMIG1//F1+) will be sold on a negotiated basis. J.P. Morgan Securities is the lead manager for the series 2008A-1 bonds; Citigroup Global Markets will be the lead manager for the 2008B-1 bonds; Stone & Youngberg will be the senior manager for the 2008C-1 bonds; Merrill Lynch, Pierce Fenner & Smith was the lead manager for the series 2008D-1 bonds; Morgan Stanley & Co. is the lead for the series 2008E-1 bonds; and Lehman Brothers is the senior manager for the series 2008G-1 bonds.

The sale includes $110 million in series 2008A-1 bonds, $110 million in series 2008B-1 bonds, $25 million in series 2008C-1 bonds, $155 million in series 2008D-1 bonds, $57.9 million in series 2008E-1 bonds and $50 million in series 2008G-1 bonds.

The bonds initially bear interest at the weekly rate but may be converted to the daily-, commercial paper-, term-, fixed-, index- or auction-rate modes.

Proceeds will be used to refund the authority's outstanding series 2006A-2, series 2006A-3, series 2006B-2, series 2006D-1, series 2006D-3 and series 2006E-2 bonds, all of which are XL Capital-insured.

Stanford Hospital sale planned

Also coming up, Stanford Hospital and Clinics plans to price $324.4 million variable-rate refunding revenue bonds, according to preliminary official statements.

The sale includes $70.5 million series 2008A1, $85.7 million series 2008A3, $84.1 million series 2008B1 and $84.1 million series 2008B2 bonds.

The bonds will price through the California Health Facilities Financing Authority.

The series 2008A1 and 2008A2 bonds are due Nov. 15, 2040, and the series 2008B1 and B2 bonds are due Nov. 15, 2045.

The series 2008A1 and 2008A2 bonds initially will price with a long-term interest rate, and the series 2008B1 and 2008B2 bonds will price with a weekly interest rate.

Morgan Stanley is the senior manager of the negotiated sales, and Goldman, Sachs & Co. is a co-manager.

Competitive sales

Dallas, Texas, intends to price $161.37 million waterworks and sewer system revenue refunding bonds in a competitive sale on Wednesday, according to a notice.

The series 2008 bonds (Aa2/AAA/) have serial maturities from Oct. 1, 2008 through Oct. 1, 2037.

First Southwest Co. and Estrada Hinojosa & Co. are co-financial advisers.

Proceeds will be used to refund and retire $165 million of the city's outstanding $230.542 million commercial paper notes.

The Commonwealth of Virginia also intends to price $93.785 million G.O. bonds in a competitive sale on June 4, according to a preliminary official statement released Thursday.

The series 2008A bonds have serial maturities from 2009 through 2028.

First Southwest is the state's financial adviser.

Proceeds will be used to finance capital projects for educational, park and recreational facilities.

Illinois Finance bonds

Elsewhere, on June 3, the Illinois Finance Authority plans to price $80 million in series 2008 commercial paper revenue notes for the Loyola University of Chicago Financing Program, a sellsider connected to the sale told Prospect News.

"We're aiming for June 3," the sellsider said. "It's not set in stone yet, but that's what we're hoping for."

The notes (P-1//) will be sold on a negotiated basis with Banc of America Securities as the lead manager.

The authority plans to loan the money to Loyola University in Chicago. The loan will be used to refinance some of the university's debt, as well as to refinance, finance or reimburse the university for costs related to the acquisition, construction, renovation, improvement and equipment of some facilities.

Avon Two Thousand plans sale

Moving to other upcoming deals, the Avon Two Thousand School Building Corp. in Indiana intends to sell $74 million in first mortgage bonds, according to a calendar.

The bonds (/A/) will be sold on a negotiated basis with City Securities as the senior manager.

The bonds are due from 2010 to 2034 and are expected to price the week of June 9. No exact pricing date could be determined by press time Thursday.

Proceeds will be used for the Advanced Learning Center.

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