Muni market heating up for June; Massachusetts Water Resources prices $1.162 billion multi-modal bonds

By Cristal Cody and Sheri Kasprzak

New York, May 29 - The municipal market is expected to heat up this June with billions of dollars in sale planned for the month.

"There's a billion-dollar deal for North Texas coming on and a lot of other stuff coming up," a sell-side source said Thursday. "I don't see any reason things are going to dry up anytime soon."

Meanwhile, pricing action was rather active on Thursday as well.

The session was led by a $1.162 billion sale of multi-modal bonds from the Massachusetts Water Resources Authority. The bonds priced with 1.6% to 1.75% initial rates on Thursday, a source with the issuer told Prospect News.

The sale includes $337.96 million series 2008A bonds due Aug. 1, 2037; $124.58 million series 2008B bonds due Aug. 1, 2031; $199.375 million series 2008C bonds due Nov. 1, 2026; $83.6 million series 2008D bonds due Aug. 1, 2011; $224.74 million series 2008E bonds due Aug. 1, 2037; and $191.69 million series 2008F bonds due Aug. 1, 2029.

The sale is the largest in the authority's history.

"For the first time, [the authority] traded bonds on its own strong credit rating, as opposed to that of the insurance policy or letter of credit," the source said.

The subordinated general revenue refunding bonds (Aa3/AA-/AA-) priced with an initial weekly rate.

Citigroup Global Markets managed the negotiated sale of the series 2008A bonds; Lehman Brothers managed the series 2008B bonds; JPMorgan managed the series 2008C and 2008D bonds; Morgan Stanley managed the series 2008E bonds and Goldman, Sachs & Co. managed the series 2008F bonds.

Proceeds will be used to refund the authority's 13 outstanding subordinated auction-rate and insured variable-rate demand bonds. Rates for those bonds had climbed as high as 11%.

Sacramento utility bonds priced

Also priced Thursday was $520.475 million in electric revenue refunding bond from the Sacramento Municipal Utility District. The bonds priced with 3% to 5% coupons, a sell-side source told Prospect News.

Preliminary terms list 3.07% to 4.47% yields for the series 2008U bonds (A1/A/A).

The bonds have serial maturities from 2014 through 2028.

"We will continue to take orders on the maturities, so these are not final," the sell-side source said late Thursday afternoon.

The final pricing terms are expected to be available on Friday.

Goldman, Sachs & Co. is the senior manager of the negotiated sale.

Proceeds will be used to finance or refinance improvements and additions to the district's electric system and refund all or a portion of the district's outstanding $406.85 million auction-rate bonds.

Phoenix Civic prices $469.7 million bonds

In other pricing news, the Phoenix Civic Improvement Corp. in Arizona priced $469.7 million in series 2008 airport revenue and revenue refunding bonds, said a sell-side source connected to the deal.

The bonds (Aa3/AA-/) were sold on a negotiated basis with Lehman Brothers as the senior manager.

The sale included $206.84 million in series 2008A bonds, which are due 2020 to 2028 with term bonds due 2038, 2033 and 2038, and $43.16 million in series 2008B bonds, which are due 2012 to 2019. The sale also included $109.85 million in series 2008C bonds, due from 2009 to 2022, and $68.52 million in series 2008D bonds, due from 2020.

The 2008A bonds have coupons from 4.8% to 5% with yields from 4.45% to 5.07%. The 2008B bonds have coupons from 5% to 5.25% with yields from 4.15% to 4.87%. The 2008C bonds have coupons from 3% to 5% and yields ranging from 2.54% to 4.61%. The 2008D bonds have 4% to 5.25% coupons with yields from 3.25% to 4.97%.

Proceeds will be used for improvements to Phoenix's Sky Harbor International Airport.

Riverside transportation bonds

The Riverside County Transportation Commission in California priced $126.395 million sales tax revenue bonds with 4% to 5% coupons to yield 2.625%, a sell-side source said Thursday.

The $94.395 million series 2008A1 bonds priced on Wednesday with a 5% coupon and the $32 million series 2008A2 bonds priced with a 4% coupon.

"It was a difficult day to price. Treasury yields were up on the day, particularly on the short end, but the bonds completely sold and were oversubscribed with good investor reception," the sell-side source said.

The bonds (Aa2/AA+/AA), which mature June 1, 2029, have an initial mandatory tender date on Dec. 1, 2009.

Lehman Brothers was the senior manager of the negotiated sale and Banc of America Securities LLC was the co-manager.

Proceeds will be used to refinance the commission's outstanding $110.005 million series 2005A and 2005B commercial paper notes and fund capitalized interest on the series 2008 bonds.

In other pricing news, the Duluth Independent School District in Minnesota priced $111.44 million in a competitive sale on Thursday, a source confirmed.

The pricing terms on the bonds will be presented Thursday night to the district board of supervisors.

The bonds are due from 2009 to 2028.

Proceeds will be used to finance district projects.

Citizen Property's $1.5 billion

Citizens Property Insurance Corp. was expected to price $1.5 billion high-risk account senior secured bonds on Thursday.

The Jacksonville, Fla., company had not released any details about the bonds by late afternoon, spokesman John Kuczwanski said.

The series 2008A bonds (A2/A+/) have maturities from March 1, 2011 through March 1, 2013.

Goldman, Sachs & Co. is the senior manager of the negotiated sale.

Proceeds will be used to provide resources to the high-risk account, pending a need to pay policy claims and other expenses from future storms.

Citizens Property was created by the Florida Legislature to provide residential and commercial property and casualty insurance coverage in the state.

North Texas Tollway postpones sale

Another billion-dollar sale that had been planned for Thursday was postponed.

The North Texas Tollway Authority was set to price $1 billion in series 2008F second-tier revenue refunding bonds, but the deal was put on the backburner because of the abbreviated workweek, said Sherita Coffelt, a spokeswoman for the authority.

"A decision was made to postpone the sale due to the short holiday week," Coffelt said in an interview Thursday.

"The sale has not been rescheduled yet."

The bonds (Aa3/BBB+/) were expected to price Thursday on a negotiated basis with Lehman Brothers as the senior manager.

The bonds are due 2030 to 2038 and the proceeds will refund some of the authority's outstanding bonds.

Texas board bonds pulled

Elsewhere, the Texas Higher Education Coordinating Board is one issuer looking at the market on a daily basis, though.

The board postponed the competitive sale Thursday of $102.435 million general obligation bonds, a source connected to the deal told Prospect News.

"We pulled it," the source said.

"Our desk didn't feel like there was enough time to get the best bids so it's back on day-to-day status and we'll just play it by ear on when the best time to go out to the market is."

The $74.39 million series 2008A college student loan bonds and $28.045 million series 2008B college student loan refunding bonds (Aa1/AA/) may be sold on a day between May 28 and June 10.

The series 2008A bonds have serial maturities from 2012 through 2032. The series 2008B bonds have maturities from 2014 through 2018.

First Southwest Co. is the state board's financial advisor.

Proceeds will be used to fund a student loan program and to refund the outstanding $26.82 million in Aug. 1, 2009 maturities from the series 1997, 1999, 2000 and 2002 student loan bonds.

Alaska Industrial Development bonds

In other pricing news, the Alaska Industrial Development and Export Authority priced $107.385 million in series 2008 revolving fund refunding revenue bonds on Thursday, said a source at the issuer.

The terms of the sale, however, will not be available until Friday, she said.

"They're still going through everything," said the issuer source Thursday afternoon.

The bonds (A1//) were sold on a negotiated basis with Goldman, Sachs & Co. and Merrill Lynch as the senior managers.

The sale included $53.795 million in series 2008A bonds and $53.59 million in series 2008B bonds.

Proceeds will refund the authority's series 2007A and 2007B revolving fund bonds.

Carolina Heath bonds planned

Looking to upcoming bond offerings, the Carolinas HealthCare System, legally known as the Charlotte-Mecklenburg Hospital Authority, plans to price $305.03 million refunding revenue bonds on June 5, the issuer said Thursday.

The series 2008A bonds (Aa3//) have serial maturities from 2010 through 2028 and term bonds in 2032, 2038 and 2047.

No pricing target is set for the bonds, said Mark Keener, treasurer.

"As low as possible, obviously. Assuming the market is calm and stable, we'll get a good rate," he said.

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

Proceeds will be used to refund the series 1996 variable-rate bonds and series 2003B, 2005E and 2007I auction-rate bonds.

Detroit bonds priced

Elsewhere, the City of Detroit was set to price $188.705 million in series 2008 bonds (/BBB/BBB-) on Thursday, but calls to the issuer for pricing terms were not returned by press time.

The bonds were set to price on a negotiated basis with SBK-Brooks Investments and Merrill Lynch as the senior managers.

The sale includes $57.105 million in series 2008A bonds, $60.06 million in series 2008B bonds, $46.54 million in series 2008A-1 bonds and $25 million in series 2008A-2 bonds.

The 2008A bonds are due 2013 to 2028, the 2008B bonds are due 2009 to 2018, the 2008A-1 bonds are due 2014 to 2017 and the 2008A-2 bonds are due 2010 to 2014.

Proceeds will be used for a deposit to the construction fund and for refunding outstanding bonds.

California Infrastructure bonds

Looking ahead, the California Infrastructure and Economic Development Bank tentatively set a June 4 pricing date for its $198.18 million series 2008A revenue bonds, said Tara Dunn, public finance officer for the bank. The pricing date may be changed if market conditions aren't favorable, Dunn added.

The bonds (A2//) will be sold on a negotiated basis with Banc of America Securities as the lead manager.

The proceeds will be used for computer hardware and software systems, other equipment, control services at electric transmission facilities and the refunding of the bank's outstanding series 2000, 2004 and 2007 revenue bonds.

Ohio Housing Finance bonds

In upcoming sales, the Ohio Housing Finance Agency intends to price $125 million in series 2008 residential mortgage revenue bonds, according a preliminary official statement.

The sale includes $80 million in series 2008D AMT bonds and $45 million in series 2008E variable-rate demand bonds.

The 2008D bond are due from 2010 to 2018 with term bonds due 2023, 2028 and 2031 and the 2008E bonds are due 2039.

Goldman, Sachs & Co. is the senior manager for the sale and the sole underwriter for the 2008E bonds.

Proceeds will be used for down payment assistance grants and a deposit to an acquisition account.

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