Municipals retain firm tone; Ohio brings $186.2 million state facilities refunding bonds

By Sheri Kasprzak

New York, Sept. 2 - Municipals once again saw some strength, but it seems to be localized only to the long end of the curve, market insiders reported Wednesday.

"The market is firming somewhat," one trader said in the afternoon.

"Yields are down about 2 to 3 basis points for 30-year bonds. The rest of the market is mostly unchanged. Primary supply is really thin, and we expect that to be the case for next week, too, because of the Labor Day holiday."

Among Wednesday's light trading activity were the Wisconsin Health and Educational Facilities Authority bonds recently sold for Aurora Health System. The 5% 2019 bonds were seen at 4.807%. One trader said the bonds were widely traded during the session.

"There seems to be big demand, but I'm not really sure why," he said.

Meanwhile, in the primary market, the State of Ohio sold $186.2 million in series 2009 state facilities refunding bonds Wednesday, said a sellside source connected to the deal.

The deal included $89.8 million in series 2009B administrative building bonds, $79.6 million in series 2009B adult correctional facility bonds and $16.8 million in series 2009B juvenile correctional facility bonds.

The administrative building bonds are due 2010 and 2013 to 2024 with coupons from 2% to 5% and yields from 0.6% to 4%. The adult correctional facility bonds are due 2010 to 2024 with coupons from 2% to 5% and yields from 0.6% to 4%. The juvenile correctional facility bonds are due 2013 to 2024 with coupons from 3% to 4% and yields from 1.86% to 4%.

"It's about what we expected," one sellside market source noted.

"I'd say it priced about where Ohio bonds have been trading for the past couple of weeks."

The bonds (Aa3/AA/AA-) were sold through senior manager RBC Capital Markets Inc.

Proceeds will be used to refund bonds issued to construct administrative facilities, an adult correctional building and a juvenile correctional building.

Pasco County brings bonds

In other primary news, Pasco County in Florida priced Wednesday $130.025 million in series 2009 water and sewer revenue bonds (Aa3/AA/AA-), said a pricing sheet.

The sale included $26.37 million in series 2009A revenue bonds and $103.655 million in series 2009B Build America Bonds.

The bonds were sold through senior managers Morgan Keegan & Co. Inc. and Merrill Lynch & Co. Inc. The 2009A bonds are due 2013 to 2021 with 3% to 5% coupons. The 2009B bonds are due 2029, 2034 and 2039 with 1% coupons, all priced at par.

Proceeds will be used to construct, acquire and renovate the county's water and sewer system as well as terminate a swap agreement.

The county seat is Dade City.

Tarrant County bonds price

Out west, the Tarrant County Cultural Education Facilities Financing Authority of Texas sold $77.655 million in series 2009 revenue bonds for Hendrick Medical Center, said a pricing sheet.

The bonds (Aa2/AAA/) were sold through lead manager Morgan Keegan.

The sale included $33.5 million in series 2009A bonds and $44.155 million in series 2009B bonds.

The 2009A bonds are due 2010 to 2025 with coupons from 3.75% to 5.125%. The 2009B bonds are due 2011 to 2022 with coupons from 3% to 5.375%. A term bond due 2030 has a 5.375% coupon, priced at 99.686.

Proceeds will be used to fund improvements to the medical center, which is based in Abilene.

North Carolina sale ahead

Moving to upcoming deals, the North Carolina Municipal Power Agency No. 1 plans to price $292.52 million in series 2009 Catawba Electric revenue bonds Sept. 10, said a preliminary official.

The deal includes $205.275 million in series 2009A refunding bonds, $11.61 million in series 2009B revenue bonds and $8.345 million in series 2009C revenue bonds as well as $67.29 million in series 2009D federally taxable Build America Bonds.

The bonds (A2/A/A) will be sold through senior manager Morgan Stanley & Co. Inc.

The series 2009A bonds are due 2024 and 2030. The 2009B bonds are due 2021, and the 2009C bonds are due 2021 to 2022. The 2009D bonds are due 2032.

Proceeds will be used to refund existing debt as well as terminate a swap agreement.

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