Houston brings $449 million in airport bonds; municipals flatten in active day for trades

By Aaron Hochman-Zimmerman and Sheri Kasprzak

New York, July 30 - Thursday proved to be a busy day for municipals, said a trader, even as the tone of the market flatlined.

The trader said more activity was seen in the secondary market on Thursday than in the rest of the week.

In other news, California spreads to high-grade municipals were seen near 125 basis points to 130 bps, said Tom Kozlik, a Janney Montgomery Scott LLC vice president and municipal credit analyst.

"There's more movement there than I thought," he said, as the same spreads were as wide as 190 bps at the end of June and 180 bps to 175 bps in July.

"I was shocked at that," he said, although considering all that has happened, the numbers add up.

There were less drastic moves in Illinois and Pennsylvania, he said. "We won't see the differentiation that we saw with Cal."

Still, Philadelphia's inability to pay its vendors on time turned heads at rating agencies even though the agencies often expect Pennsylvania's budget to be late "by a week or two," he said.

"This one is a little different," he added.

Houston upsizes, prices

Houston priced an upsized $449 million issue of series 2009A airport system senior-lien revenue and refunding bonds (Aa3/AA-/) with yields from 3.28% to 5.67%, according to a market source.

The bonds, upsized from $420 million, carry serial maturities from 2015 to 2024 with term bonds due 2029, 2034 and 2039.

The serial bond yields ranged from 3.28% to 5%. The term bonds due 2029, 2034 and 2039 yield 5.36%, 5.62% and 5.67%, respectively.

J.P. Morgan Securities Inc. acted as lead underwriter for the negotiated deal.

Proceeds will be used to refund outstanding airport system bonds and reimburse the city for improvements to the airport.

The rumor was that the underwriter "lowered yields from 3 bps to 7 bps," a source said, "so there probably was a good amount of a appetite."

"[We heard] it was way oversubscribed in most cases, so they were probably able to bump that," he said about the maturities.

Louisiana Public prices

The Louisiana Public Facilities Authority priced a $156.005 million series 2009A revenue refunding bond (A1/A+/) at an all-in true interest cost of 5.83% on behalf of Christus Health, according to a market source.

The bonds carry serial maturities from 2010 to 2020 with term bonds due 2024 and 2029.

There is a call at par on July 1, 2019, which does not include the 5.875% bond due 2024. That bond has a call at par on July 1, 2014.

Citigroup Global Markets Inc. and Goldman, Sachs & Co. acted as lead underwriters for the negotiated deal. Edward D. Jones & Co., Merrill Lynch & Co. Inc., Morgan Stanley & Co. Inc. and RBC Capital Markets Inc. were co-managers.

Proceeds will be used to refund existing debt and make a deposit to a debt service reserve fund.

The Louisiana Public Facilities Authority is located in Baton Rouge, La.

Elsewhere in the primary market, the North Dakota Housing Finance Agency was in the process of pricing $133.425 million in series 2009 AMT and non-AMT bonds, but the terms were not finalized by press time, said a sellside source.

The bonds were being sold through lead managers RBC Capital Markets, and the deal included $80 million in series 2009A non-AMT bonds and $53.425 million in series 2009B AMT variable-rate bonds.

Proceeds will be used to issue loans and refund outstanding debt.

Michigan Muni Bond Authority deal ahead

Moving to upcoming sales, the Michigan Municipal Bond Authority is expected to price $691.35 million in series 2009C state-aid revenue notes, said a preliminary official statement.

The offering includes $281.575 million in series 2009C-1 notes, $234.87 million in series 2009C-2 notes and $174.905 million in series 2009C-3 notes.

The notes (/SP-1+/) will be sold through senior managers J.P. Morgan Securities Inc. and Siebert Branford Shank & Co. LLC.

The notes are due Aug. 20, 2010.

Proceeds will be used to purchase notes issued by some school districts within the state.

The authority is based in Lansing.

Birmingham Children's Hospital to price

Also coming up, the Special Care Facilities Financing Authority of the City of Birmingham in Alabama plans to price $235 million in series 2009 health care facilities revenue bonds for Children's Hospital, according to a preliminary official statement. The deal is expected to come to market during the week of Aug. 3.

The bonds (A3/A/) will be sold on a negotiated basis with Morgan Keegan & Co. Inc. as the lead manager.

The bonds are due 2015 to 2021 with term bonds due 2025, 2029, 2034 and 2039.

Proceeds will be used to replace and expand portions of Children's Hospital as well as renovated existing facilities at the hospital.

Charlotte-Mecklenburg deal to come

In other upcoming offerings, the Charlotte-Mecklenburg Hospital Authority in North Carolina is gearing up to price $223.935 million in series 2009A health care revenue refunding bonds for the Carolinas Health Care System, said a preliminary official statement. Pricing is expected in August.

The bonds (Aa3/AA-/) will be sold through lead manager Merrill Lynch.

The bonds are due 2010 to 2024 with term bonds due 2029 and 2039.

Proceeds will be used to refund the health care system's 1997A, 2007J, 2007K and 2007L bonds.

Secondary flattens

Moving to the secondary market, a trader said activity did pick up, but the tone of the market remained mostly unmoved.

"It has been pretty active," said the trader. "Seeing more [interest] today than we've seen all week. There's quite a bit of interest going on in the longer bonds."

In specific trades, the Indianapolis Local Public Improvement Bond Bank waterworks project bonds were seen moving. The 5.75% 2038 bonds were seen at 5.527% Thursday afternoon. The 5.5% 2029s were seen at par.

Elsewhere, the City of Philadelphia's recently priced refunding bonds were seen moving. The 5% 2026 bonds were seen at par.

In other trades, King County, Wash.'s sewer revenue bonds were also moving. The 5% 2039s were seen at 5.018%.

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