Investors stay cautious even as pricing action heats up; Bay Area Toll, Calif., sells $715 million

By Cristal Cody and Sheri Kasprzak

New York, Aug. 6 - Investors are still wary given shaky market conditions despite continued new issue activity in the municipal bond market.

A sellside source told Prospect News Wednesday that both "retail and institutional investors continued to be selective and somewhat cautious" this week.

But new offerings are finding "ample demand as the street is looking to reinvest the proceeds from Aug. 1 calls and coupon payments."

In pricing action, the Bay Area Toll Authority in California sold $715 million toll bridge revenue bonds on Tuesday, but terms were not immediately available.

The series 2008F1 bonds (Aa3) were sold in a negotiated sale managed by lead underwriters Citigroup Global Markets and Merrill Lynch & Co.

Proceeds will be used to refund all $507 million of the authority's outstanding Ambac-insured auction-rate securities and $150 million in Ambac-insured variable-rate bonds.

Albuquerque turnout down

Market conditions may have been at the core of a disappointing bid turnout for the Albuquerque Municipal School District No. 12's $134 million in general obligation school building bonds.

The New Mexico-based district found slower action than expected during the competitive sale Tuesday.

The bonds priced with a 4.199% true interest cost from winning bidder Piper Jaffray & Co., a market source told Prospect News.

"We had five bidders," the source said. "Typically they get 10 to 12 bidders on their bonds, but this was surprising."

The series 2008B bonds (Aa2/AA/) priced with 4% to 5% coupons to yield 2.3% to 4.69%.

The bonds have serial maturities from 2010 through 2023.

Proceeds will be used to build, remodel and furnish school buildings; purchase and improve school grounds; purchase computer equipment and provide matching funds for capital outlay projects.

San Diego County gets 2.76% rate

Also this week, San Diego County in California priced $100 million taxable pension obligation bonds with a 2.76% initial rate on Tuesday, a source with the issuer told Prospect News.

The $50 million series 2008B1 and $50 million series 2008B2 variable-rate demand obligations are due Aug. 15, 2027.

The bonds (Aa3/AA/AA) priced initially with a weekly interest rate.

Citigroup Global Markets managed the negotiated sale of the series 2008B1 bonds, and De La Rosa & Co. managed the series 2008B2 bonds.

Proceeds will be used to refund the county's outstanding series 2002B auction-rate pension obligation bonds.

Dallas County district bond sale

Market conditions didn't keep the investors away from the Dallas County Community College District's $221,604,583 in series 2008 general obligation refunding and improvement bonds, said Ed DesPlas, chancellor of business affairs at the district.

"It went exceedingly well," said DesPlas in an interview Wednesday.

"We had a great true interest cost. The true interest cost came in at 4.475%, which is excellent. We're pleased. We had more orders than the amount of bonds we were selling."

The district had planned to sell an even $220 million.

The bonds (//AAA) were sold Tuesday on a negotiated basis with Southwest Securities and Ramirez & Co. as the lead managers. The true interest cost came in at 4.475%.

The bonds are due 2009 to 2028 with coupons from 3.5% to 5% and yields from 1.6% to 4.74%.

Proceeds will be used to refund the district's outstanding commercial paper notes as well as construct and equip school buildings.

Texas to sell $6.4 billion

Heading up new sales, Texas is gearing up to price $6.4 billion in series 2008 tax and revenue anticipation notes, said a source close the deal.

The bonds (//F1+), which mature Aug. 28, 2009, will be sold on a competitive basis on Aug. 19.

Proceeds will be used for general expenses in the state.

In other new offerings, the California Housing Finance Agency plans to sell $250 million home mortgage revenue bonds on Tuesday, according to the treasurer's office.

The bonds (Aa2/AA-/) also will be sold in a retail order period on Monday.

The $189.79 million series 2008L bonds have serial maturities from 2009 through 2018 and terms due 2028, 2033 and 2038.

The $60.21 million series 2008M term bonds are due 2023 and 2026.

Merrill Lynch & Co. is the senior manager of the negotiated sale.

Proceeds will be used to make or purchase mortgage loans or mortgage-backed securities and to redeem the $18.455 million outstanding from the series 2001R revenue bonds.

Lone Star sale ahead

Also coming up, the Lone Star College System in Texas intends to price its previously announced $150 million general obligation bonds the week of Aug. 11, according to a sale calendar.

The series 2008 limited tax bonds (/AA+/) have serial maturities in 2009 and 2010 and 2013 through 2038.

Morgan Keegan & Co. is the senior manager of the negotiated sale.

Proceeds will be used to construct and equip school buildings.

St. Louis Park sells $221.85 million

Earlier this week, the City of St. Louis Park in Minnesota sold $221.85 million health care facilities revenue refunding bonds for Park Nicollet Health Services, according to an official statement.

The series 2008C bonds (/A/) priced with 5.5% coupons to yield 2.85% to 5.15% for the serial maturities from 2009 through 2018.

The terms due 2023 priced with a 5.5% coupon to yield 5.65%. The terms due 2026 priced with a 5.625% coupon to yield 5.77%, and the 2030 term bonds priced with a 5.75% coupon to yield 5.92%.

The bonds were sold in a negotiated sale handled by senior manager Morgan Stanley.

Proceeds will be used to refund the series 2003A periodic auction reset revenue bonds, pay termination fees on interest rate swaps and fund a debt service reserve fund.

Bexar County hospital sale

In other offerings, the Bexar County Hospital District in Texas intends to sell $274.1 million in series 2008 combination tax and revenue certificates of obligation, said a sellsider familiar with the deal Wednesday.

The bonds are set to price the week of Aug. 18, but no exact pricing date has been set at this time.

The bonds will be sold on a competitive basis.

Proceeds will be used for capital expenses pending the receipt of ad valorem taxes.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.