Christus Health to sell $398.975 million in revenue refunding bonds Friday; sales line up for 2009

By Sheri Kasprzak

New York, Dec. 17 - The holiday season is apparently already upon the municipals market, as issuers wait it out until 2009 to begin pricing new offerings.

"It is absolutely dead out there," said one sellside source reached Wednesday afternoon.

"We don't have anything coming up until January. I'm pretty sure that's the way it is most places. Issuers are just going to wait and see what happens with the market in the New Year. I think at this point, it's just too late and there's such a small window in which to price things that it's really hardly worth it."

Even so, some activity is planned for later in the week.

Christus Health out of Texas and Louisiana is expected to price its previously announced $398.975 million in series 2008 variable-rate revenue refunding bonds on Friday, said an issuer source.

"It might change due to market conditions, but that's the plan so far," the issuer source said.

The sale includes $268.56 million in series 2008C-1 through 2008C-5 bonds being sold through the Tarrant County Cultural Education Facilities Finance Corp. and $130.415 million in series 2008D-1 through 2008D-2 bonds being sold through the Louisiana Public Facilities Authority.

The bonds will be sold on a negotiated basis with Citigroup Global Markets as senior manager for the series 2008C-1, 2008C-2 and 2008D-1 bonds; Merrill Lynch & Co. as the lead manager for the 2008C-5 bonds; Banc of America Securities as lead manager for the 2008C-3 and 2008C-4 bonds; and Goldman, Sachs & Co. as the lead manager for the series 2008D-2 bonds.

The 2008C-1 through 2008C-4 bonds are due July 1, 2047, and the 2008C-5 bonds are due July 1, 2031. The 2008D-1 and 2008D-2 bonds are also due July 1, 2031.

Proceeds from the 2008C bonds will be used to refund the Harris County Health Facilities Development Corp.'s series 2005A revenue bonds and Tarrant County Cultural Education Facilities Authority's series 2007A revenue bonds. Proceeds from the 2008D bonds will be used to refund the Louisiana Public Facilities Authority's series 2005C-2 revenue bonds.

Virginia College Building sale

Some offerings from 2009 were already being announced Wednesday, led by a $330 million sale of series 2009A educational facilities revenue bonds (Aa1) from the Virginia College Building Authority.

The authority plans to price the bonds during the week of Jan. 5, said a calendar of upcoming sales.

The full details of the offering were not immediately available, but the offering is expected to price on a negotiated basis.

The proceeds will be used for the acquisition of notes issued by nine state higher educational institutions.

San Diego water deal

Also coming up in January, the San Diego Public Facilities Finance Authority in California has announced plans to price $65 million in series 2009A water revenue bonds for the City of San Diego Water Enterprise on Jan. 16, a sellside source confirmed Wednesday.

The bonds (A1//AA-) will be sold on a negotiated basis with Morgan Stanley & Co. as the lead manager.

Proceeds will be used to refund outstanding debt and fund a debt service reserve.

Secondary market improves

Meanwhile, the secondary market saw improvements for the second straight day following the Federal Reserve's decision to slash interest rates to a range of 0% to 0.25%.

"It's looking really good today," said one trader of the tone of the market. "We're up five, six basis points, probably a bit more on the long end."

Volume of trades even improved, the trader said.

"It's picking up from earlier in the week," he said. "We're seeing more activity."

Looking to specific trades, one trader saw San Diego County Water Authority's certificates of participation from earlier this year trading. The 5% 2027s were seen at 6% on Wednesday.

The recently freed-to-trade University of Chicago series 2008B revenue bonds were also in play Wednesday with the 4.25% 2016s trading at 3.85%. The bonds priced on Dec. 12 to yield 4.06%.

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