Municipals 'not overwhelmed yet'; University of California taps market; California eyes $4 billion

By Cristal Cody and Aaron Hochman-Zimmerman

New York, March 13 - The municipal market worked throughout the week to handle the new dump of supply issuers put into play.

The paper was digested, but the week went "a little worse than expected, but not too bad," an underwriter said.

"I thought actually the market handled it pretty well," a senior trader said, and "it was the biggest supply week of the year ... although that's not saying much."

Still, the market was "not overwhelmed yet," he said, and trading remained very light.

The usual "March slump" has not hit yet, he said; maybe it will wait until April.

Golden Bears' golden bonds

The Regents of the University of California priced $794.22 million series O-P general revenue bonds, according to Trey Davis, a university spokesman.

The bonds priced at a true interest cost of 5.19%.

Barclays Capital Inc. acted as lead underwriter for the negotiated deal.

The series O bonds were sold for new capital, while the series P bonds were sold to refinance existing debt.

The Regents of the University of California is located in Oakland, Calif.

All that glitters...

The Golden State would not stop there. California intends to return to the bond market after a nine-month absence with plans to price $4 billion in general obligation bonds on March 25, state treasurer Bill Lockyer said Friday.

The bonds also will be offered through a retail order period on March 23 and March 24.

"It's great to get back in the game," Lockyer said in a statement. "It's been too long, and we think investors agree. The market is ready for a California comeback. We're excited to get the state's infrastructure financing program back on track and start generating good jobs again."

Lockyer plans radio and print advertisements throughout California and New York to get the word out.

California was forced to drop out of the market after a budget crisis and the turmoil in the financial markets put the state into a financial lockdown. The state's last sale of G.O. bonds was a $1.5 billion offering in June 2008.

Lockyer said the state may hold a second large sale of G.O. bonds in late April to take advantage of a program created by the federal economic stimulus package.

Under the Build America Bonds program, when a state issues taxable bonds, the federal government either provides the state a cash subsidy or gives investors a tax credit.

The state may choose which option it prefers. If California uses the program, it probably will take the cash, Lockyer said.

California adopted a budget plan on Feb. 20 to deal with an estimated $40 billion deficit through fiscal 2010.

The state has been under a freeze on loans for infrastructure projects since Dec. 17 to preserve cash for the general fund and education services.

The proceeds from the sale will be used to restart the infrastructure program, though when and by how much the freeze will be lifted has not been decided, Lockyer said.

The State Pooled Money Investment Board is scheduled to meet on Wednesday to discus the freeze.

Sarasota rolls out $75.625 million

The Sarasota County School Board in Florida priced $75.625 million series 2009 certificates of participation (Aa3/AA-/AA-) on Thursday, according to consultant Nick Rocca of Public Financial Management Inc.

The bonds priced with a TIC of 5.02% and with serial maturities from 2010 through 2024.

RBC Capital Markets Corp. acted as the lead underwriter for the negotiated deal. Public Financial Management Inc. acted as adviser to the deal.

Proceeds are intended to finance the acquisition, construction and installation of educational facilities.

March brings green showers

March is gearing up to be a major month for issuers.

Houston intends to price $481.13 million in combined utility system revenue and refunding bonds, according to a preliminary official statement.

The series 2009A first-lien bonds have serial maturities from Nov. 15, 2009 through Nov. 15, 2029 and terms due in 2033 and 2038.

Piper Jaffray & Co. is the senior manager of the negotiated sale.

The proceeds will be used to refund and defease $300 million in outstanding series A commercial paper notes and series 2008D2 first-lien revenue refunding bonds. The proceeds also will be used to reimburse the system for project costs.

Also ahead, the Virginia Housing Development Authority intends to sell $348 million in rental housing bonds before the end of March, the issuer said Friday.

The bonds (Aa1/AA+/) are expected to price between Monday and March 24, spokesman Brian Matt told Prospect News.

The sale includes $176.91 million in series 2009C and $171.09 million in series 2009D taxable bonds, according to a preliminary official statement.

Raymond James & Associates, Inc. is the senior manager of the negotiated sale.

The proceeds will be used to refund outstanding debt.

Not to be left out, Connecticut expects to price $310 million in its previously announced G.O. bonds on Wednesday, a source with the issuer told Prospect News.

"We could close it out earlier, but that's our plan," the source said.

The bonds (//AA) also will be offered through retail orders on Monday and Tuesday.

The $80 million in series 2009A taxable bonds have serial maturities from 2010 through 2019, according to a preliminary official statement.

The $155 million in series 2009B new money bonds have serial maturities from 2010 through 2023.

The $75 million in series 2009C refunding bonds have serial maturities from 2010 through 2017.

Morgan Stanley & Co. Inc. is the senior manager of the negotiated sale.

The proceeds will be used to finance projects and refund the callable maturities of the outstanding series 1997D, series 1998C and series 1998D G.O. bonds.

Orange County Sanitation to sell $200 million

In other sales, the Orange County Sanitation District in California plans to price $200 million in certificates of participation through a competitive sale on Wednesday, according to a notice of sale.

The series 2009A certificates have serial maturities from 2010 through 2039.

Public Resources Advisory Group Inc. is the financial adviser.

The proceeds will be used to finance improvements to the wastewater system.

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