Virginia Public Building Authority brings $318 million bonds; primary market volume dominates

By Aaron Hochman-Zimmerman and Sheri Kasprzak

New York, May 20 - The municipals primary market continued to take the center stage Wednesday with the bulk of the week's offerings pricing during the day.

But the high volume that came through the market on Wednesday was not discriminating in its tastes, a financial adviser said.

"The market is receptive to a lot of different types of credits," he said.

A trader said that the market was "constructive for most of the day."

"[Treasury secretary Tim] Geithner was out there saying spreads were coming in," he said.

"Treasuries continue to push the psychology along. There are more buyers than sellers ... more dough coming due."

Specifically, the market maintained a tremendous amount of interest in the taxable bonds, the trader added.

Plus, people are trying to print deals ahead of the long weekend, he said.

Following the weekend, issuance will be affected by the beginnings of a summer slowdown, but "seasonally there's still a lot of money to go to work," he said.

"Those two forces kind of make an average go of it," he said.

Another market source said he feels like the week ahead will be very light.

"It's a short week, and issuers hate going out on a short week," he noted.

"There's less time for retail orders, there's less time to feel out the market."

Old Dominion buildings

Looking to that very crowded primary market, the Virginia Public Building Authority priced $318 million series 2009 revenue bonds at a 3.59% true interest cost (Aa1/AA+/AA+) on Tuesday, according to director of debt management Evelyn Whitley.

"We're pretty happy with the results," Whitley said. "Anything that goes 20 years and starts with a three sounds pretty good," she said.

The bonds carry maturities from 2010 to 2029.

BB&T Capital Markets Inc. acted as lead underwriter for the negotiated deal.

Proceeds from the sale will be used to make repairs to infrastructure and refund existing debt.

Orlando Utilities prices

Elsewhere, the Orlando Utilities Commission priced an upsized $311.775 million utility system revenue refunding bond (Aa1/AA/AA), according to treasury administrator Mike Hollingsed.

A one-year obligation drew a yield of 0.45%, while serial bonds due 2023, 2028 and 2029 and a term bond due 2033 drew yields from 4% to 4.79%.

Proceeds will be used to refund existing debt.

Morgan Stanley & Co. Inc. acted as underwriter for the negotiated deal.

Geisinger brings $115 million

Also on Wednesday, the Geisinger Authority of Pennsylvania priced $115 million in series 2009A health system revenue bonds for Geisinger Health System, said a sellside source who saw the deal.

The bonds (Aa2/AA/) were sold Wednesday through lead manager J.P. Morgan Securities Inc.

The bonds are due 2020 to 2021 with coupons from 4% to 4.125% and yields from 4.19% to 4.33%. The sale also included term bonds due 2034 and 2039. The 2034 bonds have a 5.125% coupon to yield 5.17%, and the 2039 bonds have a 5.25% coupon to yield 5.3%.

Proceeds will be used to make loans to Geisinger Health System as well as to fund the purchase price of series 2007 bonds tendered for purchase by their owners.

The Geisinger Health System is based in Danville, Pa.

New York housing sale

In other news, the New York State Housing Finance Agency priced $53.67 million in series 2009A affordable housing revenue bonds, said a sellside source connected to the deal.

The bonds are due 2011 to 2019 with term bonds due 2024, 2030, 2035 and 2041.

The serials have coupons from 1.8% to 3.8%, all priced at par. The 2024 bonds have a 4.55% coupon, the 2030 bonds a 5% coupon, the 2035 bonds a 5.2% coupon and the 2041 bonds a 5.25% coupon, all priced at par.

JPMorgan was the lead manager.

Proceeds will be used to fund mortgage loans.

Massachusetts sells

The Commonwealth of Massachusetts had been slated to price $621.43 million in series 2009 general obligation bonds, but the terms were not immediately available, said a sellside source familiar with the deal.

"We might have the finalized terms tomorrow," he noted.

The sale included $300 million in series 2009B bonds, $250 million in series 2009C bonds and $71.43 million in series 2009D bonds.

Fidelity Capital Markets Inc. was the senior manager.

Proceeds will be used to fund capital expenses.

Delaware transportation bonds

Moving to upcoming sales, the Delaware Transportation Authority is slated to sell $117.7 million in series 2009A transportation system senior revenue bonds on June 2, said a notice of sale released Wednesday.

The sale will be conducted competitively with Public Financial Management Inc. as the financial adviser.

The bonds are due 2011 to 2029.

Proceeds will be used for the authority's capital program as well as for a deposit to the debt service reserve fund.

In other upcoming deals, the Board of Regents of Eastern Michigan University plans to price $102.765 million in series 2009 general revenue bonds, said a preliminary official statement.

The sale includes tax-exempt series 2009C bonds and taxable series 2009D Build America Bonds.

The bonds (A2/A/) will be sold through lead manager Piper Jaffray & Co.

The bonds are due 2014 to 2023 with term bonds due 2029, 2034 and 2038.

Proceeds will be used to construct and renovate classroom buildings as well as construct a science building.

The university is based out of Ypsilanti.

Secondary firms again

Municipals were seen firmer, yet again, said a trader reached Wednesday.

"We're improved by about 3 to 5 basis points, with the long end experiencing the most improvement," the trader said.

In specific trades, the City of Philadelphia's recently priced series 2009 water and wastewater system revenue bonds were seen in action. The 4.25% 2020 bonds were seen trading at 4.3% on Wednesday afternoon.

Elsewhere, the East Baton Rouge Sewerage Commission's series 2009A revenue bonds were seen moving. The 5.25% 2034s were seen Wednesday at 5.15%.

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