California sells $1.5 billion; Oregon prices $750 million in TANs

By Cristal Cody and Sheri Kasprzak

New York, June 24 - As pricing action heated up for the week, activity was led by sizeable sales from California and Oregon.

Meanwhile, one issuer noted that the response to its offering was substantial. The Texas Water Development Board's debt manager Nancy Marstiller told Prospect News that the number of orders was a record for the board.

Moving back to the California pricing, the state priced $1.5 billion general obligation bonds (A1/A+/A+) on Tuesday.

Final pricing terms were not available by press time.

Citigroup Global Markets was the senior manager of the negotiated sale.

Proceeds will be used to finance projects, including for seismic safety, clean water and education, to refund outstanding commercial paper notes and to repay internal state loans.

Oregon $750 million TANs

Also on Tuesday, Oregon priced $750 million tax anticipation notes with a 3% coupon to yield 1.7%, said Larry Groth, assistant director for the state's debt division.

"We went out at 1.72% and we got improvement of two basis points," he said.

The series 2008A short-term notes (MIG1/SP-1+/F-1+) are due June 30, 2009. Bank of America was the senior manager of the negotiated sale.

Proceeds will be used for cash flow management.

Texas Water bonds price

Also on Tuesday, the Texas Water Development Board priced $258 million in series 2008B state revolving fund subordinate-lien revenue bonds, said Sandy Simon, finance director for the board.

The bonds (Aaa//AAA) priced with a 4.91% true interest cost, Simon said, but the terms were still being finalized Tuesday afternoon.

"We caught a window of opportunity this morning and received a record [number of] orders during the one-and-a-half-hour order period," Marstiller said. "We were able to reprice the bonds reducing the long end by three basis points, due to the oversubscription of orders by the team."

The bonds were sold on a negotiated basis with Morgan Keegan as the senior manager.

Proceeds will be used to originate loans to borrowers under the state's Clean Water State Revolving Fund Program.

University of Massachusetts's $125.6 million

The University of Massachusetts Building Authority priced $125.6 million project revenue bonds with a 4.878% TIC on Tuesday, the issuer told Prospect News.

The senior series 2008-2 bonds (/A+/A+) priced with 4% to 5% coupons to yield 2.2% to 5.08%, said Steven Dansby, chief financial officer.

The bonds have serial maturities from 2009 through 2028 and terms due 2032 and 2038.

Lehman Brothers was the senior manager of the negotiated sale.

"At this point, we've gone through a fairly active period and issued a substantial amount of debt in the last few months," Dansby said. "We'll be working on getting these projects started and built in the next couple of years."

Proceeds will be used to finance construction and renovation projects, including a new life sciences center on the Worcester, Mass., campus.

Frederick prices with 4.42% TIC

Frederick County, Md., priced $79.38 million G.O. public facilities bonds with a 4.418% TIC on Tuesday, said John Kroll, director of finance.

The series 2008 bonds priced with 3.5% to 5% coupons in a competitive sale won by Goldman, Sachs & Co. out of 12 bidders.

"We usually have eight or nine, so it was a very good sale this year," Kroll said. "We have infrequent sales and very high-quality bonds and that's reflective in our interest rate."

The bonds (Aa2/AA+/AA+) have serial maturities from 2009 through 2028.

Proceeds will be used to design, renovate and construct public schools, community college buildings, county buildings, county parks, roads, bridges, water facilities and solid waste facilities.

Citizens prices $1.75 billion

Florida-based Citizens Property Insurance Corp. released details of the sale of $1.5 billion short-term notes and $250 million senior secured bonds.

The series 2008A2 high-risk account senior secured short-term notes priced with a 4.5% coupon.

The insurer priced $1.25 billion of the notes to yield 3.5%. The remaining $250 million priced to yield 2.5%.

The notes (MIG 1/SP-1+/) mature June 1, 2009.

Citizens Property also priced $250 million series 2008A1 bonds with a 5% coupon to yield 4.37%.

The high-risk account senior secured bonds (A2/A+/) mature June 1, 2011.

Merrill Lynch & Co. was the senior manager of the negotiated sale.

Proceeds will be invested in tax-exempt bonds to provide liquidity for the company's high-risk account, which is used to pay policy claims and liabilities from storms.

San Diego School

In other pricing news, the San Diego Unified School District priced $215 million tax and revenue anticipation notes with a 3% coupon to yield 1.63%, a source said Tuesday.

The series 2008-2009A notes (MIG1/SP-1+/) are due July 1, 2009.

Citigroup Global Markets was the senior manager of the negotiated sale.

Proceeds will be used to finance the district's general fund cash flow requirements.

Puerto Rico sale

In other pricing news, the Puerto Rico Sales Tax Financing Corp. priced $737 million in series 2008A sales tax revenue bonds Tuesday, said a sellside source. The pricing terms, however, were still being finalized and were not released.

The bonds (A1//) were sold on a competitive basis, and the proceeds will be used to repay debt obligations owed to the corporation by the Commonwealth of Puerto Rico.

Connecticut Housing sale

Looking to upcoming deals, the Connecticut Housing Finance Authority expects to price $260.27 million mortgage finance program bonds on Thursday, the issuer told Prospect News.

The series 2008B bonds (Aaa/AAA/) first will be sold in a two-day retail order period that ends Wednesday, said Edward Myskowski, investment and debt management officer.

The $90 million subseries B1 fixed-rate bonds have maturities from 2017 to 2018 and terms in 2023, 2028 and 2034.

The $53.87 million subseries B2 fixed-rate bonds have serial maturities from 2009 through 2018 and terms in 2023 and 2028.

The $5 million subseries B3 fixed-rate bonds have serial maturities from 2009 through 2017.

The $111.4 million subseries B4 variable-rate bonds are due Nov. 15, 2038.

Citigroup Global Markets is the senior manager of the negotiated sale.

Proceeds will be used to refund outstanding bonds and to finance permanent home mortgage loans.

Michigan Tobacco bonds

The Michigan Tobacco Settlement Finance Authority plans to price $180 million tobacco settlement asset-backed bonds (/BBB/) on Wednesday, according to a sale calendar.

The authority delayed the sale earlier this month because of a similar tobacco asset bond sale in South Carolina.

The series 2008A fixed-rate current interest turbo term bonds are due June 1, 2038.

The series 2008B capital appreciation turbo term bonds are due June 1, 2058.

Citigroup Global Markets is the senior manager of the negotiated sale.

Proceeds will be used to pay $60 million for a deposit to the state's general fund and to refund the authority's series 2006B and 2006C indexed floating-rate turbo term bonds.

Oakland offering set

In other upcoming bond sales, the City of Oakland in California expects to price $155 million in tax and revenue anticipation notes, said Dawn Holt, financial analyst with the city's treasury department.

The sale includes $70 million in series 2008A notes and $85 million in series 2008B notes. The 2008A notes will be sold on a competitive basis, and the 2008B notes will be sold on a negotiated basis with JPMorgan as the senior manager.

The notes (MIG1//F1+) are expected to have a one-year term.

Proceeds will be used to finance the city's anticipated mid-year cash flow needs and to prepay the city's annual contribution to the California Public Employees Retirement System for fiscal year 2008-2009.

Northern California Power deal

Also ahead, the Northern California Power Agency intends to price $90 million hydroelectric project No. 1 revenue bonds on Thursday, according to a sale calendar.

The series 2008C and 2008D bonds will be sold in a negotiated sale managed by Citigroup Global Markets.

The bonds (A1/A+/) are insured by Assured Guaranty Corp.

Proceeds will be used to refund the series 2002A and 2002B refunding revenue bonds.

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