Issuers delay planned conversions; Missouri environmental authority prices revenue bonds

By Cristal Cody and Sheri Kasprzak

New York, March 18 - The auction-rate crisis originally sparked a frenzy of planned conversions and redemptions. Even so, at least two issuers have postponed their plans to convert existing auction-rate securities.

The St. Petersburg Health Facilities Authority in Florida had planned to convert $61.575 million in series 2007A health facilities revenue bonds on Wednesday, but said Tuesday that it would not be conducting the conversion after all.

"The borrower currently is unable to submit bids in the upcoming auction on Wednesday, March 19, 2008, as stated in its notice filed March 17, 2008, which is hereby withdrawn," the notice said.

"The borrower remains committed to pursuing the purchase through the auction of the series 2007A bonds at the earliest possible date."

Even though the Jacksonville Health Facilities Authority, also in Florida, postponed the conversion of $175.65 million in auction-rate bonds, the authority rescheduled to a March 27 date.

The conversion had been planned for Thursday.

The authority plans to convert $35 million in series 2007B hospital revenue bonds, as well as $50 million in series 2007C, $50 million in series 2007D and $25.65 million in series 2007E hospital revenue refunding bonds, all of which were sold for the Baptist Medical Center.

Other conversions set

Although some issuers are putting off their conversions, still others were getting on with theirs.

The New York City Housing Development Corp. converted the interest rate on its $215.9 million auction-rate bonds to a variable-rate, a notice said Tuesday.

Series 2006A bonds of $162 million multi-family rental housing revenue bonds and series 2006 B bonds of $53.9 million were converted Monday to a variable rate.

The bonds were priced for the 2 Gold Street project.

Because of the interest rate change, Standard & Poor's Rating Services has assigned the bonds an A-1+ rating.

Minneapolis housing authority remarketing

Minneapolis and the Housing and Redevelopment Authority in Saint Paul, Minn., expect to remarket $72.1 million fixed rate revenue bonds by the end of the month, the issuer reported Tuesday.

The city and the authority will convert the auction-rate bonds to a fixed rate and remarket the $23.2 million series 1995B bonds and the $48.9 million series 2004A bonds.

"These had been auction rate, and now they're being remarketed with a different insurance company," said Bob Lind, director of business finance for Minneapolis. "We have some other large hospital financing [borrowers] that also are looking at their options."

The bonds (Aaa/AAA/) now are insured by FSA.

The bonds were priced for Children's Healthcare and Children's Hospitals and Clinics of Minnesota.

The series 1995B bonds have maturities from Aug. 15, 2008 through Aug. 15, 2017 and a term bond due 2025.

The series 2004A bonds have maturities from Aug. 15, 2008 through Aug. 15, 2017 and term bonds due 2028 and 2034.

PiperJaffray is the remarketing agent.

Missouri authority sells $71.55 million

Moving to Tuesday's pricing news, the Missouri Environmental Improvement and Energy Resources Authority priced $71.55 million refunding revenue bonds with a 4.375% coupon, the issuer confirmed with Prospect News.

The series 2008 pollution control bonds (/AA/AA) priced in a term-rate mode due Dec. 1, 2034, said Karen Massey, deputy director of the authority.

The bonds were sold for the Associated Electric Cooperative, a nonprofit rural electric cooperative.

Goldman, Sachs & Co. was the lead manager for the negotiated sale.

The bonds are the first to refinance auction-rate securities that the authority expects to sell.

"We did a poll of our conduit financing over the past few years with auction-rate bonds," Massey said.

"Three different companies had them, and all three are changing the mode or refinancing."

Alaska draws nine bids

Elsewhere, Deven Mitchell, executive director of the Alaska Municipal Bond Bank Authority said the authority was excited with the nine bids it received when its $62.355 million general obligation bonds sold competitively Tuesday.

The series 2008 one bonds (A1/A/) priced with coupons from 5% in 2009 to 5.2% in 2038, said Mitchell.

Morgan Stanley was the winning bidder with a bid for the 4.79% true interest cost.

"It's been a volatile market," Mitchell said.

"We were really pleased to get nine bids. It was great to see the interest was out there and that folks were still bidding on bonds."

The underwriter purchased insurance from Ambac Financial Group for the bonds, he said.

Proceeds will be lent to the cities of Dillingham, Seward and Kodiak and the Kodiak Island Borough for projects that include school renovations, a public pool, a long-term care facility and a public safety building.

Sacramento bonds scheduled to price

Sacramento County, Calif., was expected to price $350.675 million taxable pension funding bonds on Tuesday.

The series 2008 refunding bonds will bear interest at one-month Libor plus a spread, Chris Marx, county debt officer, said in an earlier interview.

The bonds mature July 10, 2030.

Morgan Stanley is the underwriter for the negotiated sale.

Proceeds will be used to refund and defease $346.8 million outstanding principal of series 2004 C-1 taxable pension funding bonds.

Pricing details were not available before press time.

The San Diego County Regional Transportation Commission in California also had planned to price $600 million sales tax revenue bonds (Aa2) on Tuesday.

The $300 million each in series 2008A and 2008B bonds were expected to price in a competitive sale.

Proceeds will be used for capital projects.

Tobacco Settlement bonds on calendar

In other news, the Tobacco Settlement Financing Corp. of New York had been expected to price $441.07 million in asset-backed revenue bonds (/AA-/A+).

The bonds were set to sell on a negotiated basis through lead managers Citigroup Global Markets and Bear, Stearns & Co. Tuesday. Calls for the terms were not immediately returned.

The 2008A bonds are due 2010 to 2012 and the 2008B bonds from 2009 to 2012.

Proceeds will be used to refund the corporation's 2008A-2 asset-backed revenue bonds and 2003B-2 through 2003B-5 asset-backed revenue bonds.

San Francisco Airport bonds delayed

Despite an active day for pricings, several deals were postponed on Tuesday.

The San Francisco Airport Commission had planned to price $573 million in AMT and non-AMT bonds on Tuesday, but those bonds will now price on Wednesday.

The commission had practical reasons for putting off the sale by a day, said Kevin Cohn with the commission's finance department.

"It was just a logistics thing," Cohn said when asked if market conditions spurred the decision to put off the sale by a day.

"We just had to finish up some due diligence and decided to wait for a day."

The size of the deal may also be cut back. The commission may end up selling only $500 million to $510 million, Cohn said, noting that some of the funding candidates had dropped out.

"Unless there are some large market movements, we're expecting to sell $500 million to $510 million," Cohn said.

The bonds (A1) will be sold on a negotiated basis through lead manager Citigroup Global Markets and the bonds have a serial structure from 2009 to 2026.

California State bonds postponed

Also postponed Tuesday was an offering of $403 million in series 2008A systemwide revenue bonds from the Trustees of the California State University.

"The order period for the 2008A bonds will be tomorrow [Wednesday]," said Rosa Renaud, finance manager for the university.

The bonds (/AA-/A+) had been set to sell on Tuesday.

Lehman Brothers is the lead manager for the negotiated sale.

Proceeds from the sale will be used to finance or refinance construction, acquisition, improvement and renovation of campus buildings.

The Indiana Finance Authority plans to price $178.87 million in lease revenue bonds Wednesday, said Dan Kramer, the director of debt management for the authority.

"We're having a call this afternoon to determine the optimal day to price," Kramer said earlier in the session.

Moody's rated the bonds Aa3. S&P and Fitch have both rated the bonds AA.

The bonds will be sold on a negotiated basis through lead manager Morgan Stanley.

The offering includes $127.29 million in series 2008A-1 and 2008A-2 revenue refunding bonds, and $51.58 million in series 2008B lease revenue bonds. The 2008A bonds are due 2011 and 2018, and the 2008B bonds are due 2008 to 2011.

Proceeds will be used to refund the authority's outstanding 2004A, 2004B and 2004C bonds.

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