California Statewide Communities sells $750 million for Kaiser; primary continues to dominate

By Aaron Hochman-Zimmerman and Sheri Kasprzak

New York, May 21 - As the primary municipal market continued to be the place to be, the secondary market remained relatively unmoved.

"There's really not a lot of movement at all," said one trader reached during the afternoon.

"Everyone's so focused on the primary right now that secondary is pretty much at a standstill. Tomorrow might be different, and I think next week is really going to slow down [for primary]."

"The new issue market's been pretty heavy," another trader said. "New issues are dominating. They're priced attractively to the secondary."

The deal of the week came from the California Statewide Communities Development Authority, which priced $750 million in series 2009A revenue bonds for Kaiser Permanente, according to a sellside source who saw the deal.

The offering is part of a planned $1.6 billion. The remaining $850 million is expected to price Tuesday.

The 2013 bonds were priced to yield 3.35%, and the 2019 bonds were priced to yield 4.68%.

"It wasn't that exciting," said Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott LLC.

"It was a slightly wider spread than the Pitt deal," he said about what he called "the highest quality hospitals" in the municipal market.

Aside from the size, the deal's performance was not outstanding.

Yields were "a little better than I would have guessed, but reasonably so," he said.

"There is demand among the indexers," he said, adding that California's current budget crisis "doesn't seem to be hitting Kaiser all the hugely."

Still, about $900 million of the total issue is left to price and Friday's holiday-shortened session "is not the best day to get anything done," he said.

Aside from the leftover half of the Kaiser Permanente deal, the upcoming four-day week looks to be "a snooze fest," he said.

The "people-driven" municipal market tends to be greatly affected by holidays, he said, but "there's potential for a little selloff."

Citigroup Global Markets Inc. and J.P. Morgan Securities Inc. were the lead managers.

Proceeds will be used to renovate, construct, acquire and equip Kaiser Permanente hospitals.

The bonds were not seen reoffered Thursday.

Pitt Panthers price

In other primary market news from Thursday, the University of Pittsburgh priced $400 million series 2009A tax-exempt fixed-rate bonds on Tuesday on behalf of the University of Pittsburgh Medical Center, according to a market source.

Yields ranged from 2.79% to 5.75% at the final maturity.

The bonds carry serial maturities from 2011 to 2024 and term bonds due in 2029, 2034 and 2039.

RBC Capital Markets Corp., BNY Mellon Capital Markets LLC, PNC Capital Markets and JPMorgan acted as underwriters for the negotiated bonds.

Proceeds from the sale will be used to fund capital projects at the medical center and affiliated hospital.

In reoffering action, the 4% 2016 bonds were seen reoffered at 4.13% after pricing at 4.11%. The 4% 2012 bonds were seen reoffered at 3.13%, the same as the pricing level. The 4% 2011 bonds were reoffered at 2.79%, also the same as pricing.

Dasny deal ahead

Moving to what's ahead, the Dormitory Authority of the State of New York is expected during the week of June 1 to sell $355.52 million in series 2009 school districts revenue bond financing revenue bonds, said a preliminary official statement.

The sale includes $180.655 million in series 2009B, $157.110 million in series 2009C, $15.410 million in series 2009D and $2.345 million in series 2009E bonds.

RBC Capital Markets and Roosevelt & Cross Inc. are the lead managers.

Proceeds will be used to fund school district capital expenses and capital improvements.

Guam to price

Also coming up, the Government of Guam is set to price $283.23 million in series 2009A general obligation bonds, said a preliminary official statement.

The bonds (/B+/) will be sold on a negotiated basis with Citigroup and Piper Jaffray & Co. as the senior managers.

The bonds are due 2014, 2019 and 2039.

Proceeds will be used to fund a government-incurred settlement, pay for tax refunds and make capital improvements to Guam Memorial Hospital.

In other upcoming deals, Wake County in North Carolina is scheduled on Wednesday to bring to market $168.97 million in series 2009D G.O. refunding bonds, said a preliminary official statement.

The bonds will be sold competitively with Waters & Co. LLC as the financial adviser.

The bonds are due 2012 to 2018.

Proceeds will be used to refund the county's outstanding series 2001A, 2001B and 2002 bonds.

The county seat is Raleigh.

Secondary unmoved in light day

With the primary market dominating headlines, a trader said Thursday was very slow for trading and the tone of the market remained fairly flat.

"Not a lot of movement at all," he noted. "We're basically flat."

In specific trading activity, the Clackamas County Hospital Facility Finance Authority's series 2009A revenue bonds for Oregon's Legacy Health were seen trading. The 5.5% 2029s were seen at around par.

Also out of Oregon, the Oregon Health Sciences University's series 2009A revenue bonds were moving. The 5.75% 2039 bonds were seen at 5.488% after pricing Wednesday at 5.96%.

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