Texas TRANs will add much-needed supply to short end; Dallas County Hospital District to price

By Sheri Kasprzak

New York, Aug. 24 - The State of Texas is poised to bring the year's largest offering Tuesday, and at least one market insider says the notes will be a boon to the supply-starved short side of the market. Meanwhile, in the secondary market, traders said there was some weakness as the primary market's recent supply boom tapered off.

Texas plans to sell $5.5 billion in series 2009 tax and revenue anticipation notes (MIG 1/SP-1+/F1+). The notes carry a one-year term.

"There's not much tax-exempt supply on the short end. We've seen rates go the way they have because there's not enough supply. There is demand," said Tom Kozlik, municipal credit analyst with Janney Montgomery Scott LLC.

"After this prices tomorrow, the rest of the municipal market will be using it as a gauge for what they're seeing for the rest of the year. This is a typical issue that comes around the same time of year," he said on Monday.

The state will sell the notes competitively, and Kozlik said it might not have any other option.

"I'm not as familiar with Texas debt [as other states]," Kozlik noted. "Normally, one of the reasons is that they have to. I'm assuming one of the reasons is that they legally have to. ... If you're going to do it competitively, you'd better have the advice to get through a difficult market like we've had."

Proceeds from the notes will be used to fund general capital expenses ahead of the collection of taxes and revenues.

Secondary seen weaker

Back to the secondary market, a trader said she saw some weakness, with yields up by about 2 basis points across the yield curve.

"It's been a pretty quiet day, but we're definitely off today," she said.

"I think the market is adjusting because last week, we had so much supply [in the primary market]. Things will even out as the week progresses, I'm sure."

Among the popular bonds priced, the Wisconsin Health and Educational Facilities Authority's recently priced bonds for Children's Hospital of Wisconsin were very popular with investors Monday, a trader reported.

The 5.375% 2037 bonds were seen at 5.22%.

Elsewhere, the Broward County Airport System's revenue bonds priced last week were seen moving in the secondary.

The 5.375% 2029 bonds were seen at 5.035%.

Dallas County Hospital bonds planned

Another large sale for the week also comes out of the Lone Star State. The Dallas County Hospital District is set to sell $705 million in series 2009 limited tax bonds Wednesday, said a preliminary official statement.

The sale includes $26.1 million in series 2009A bonds, $185.035 million in series 2009B taxable Build America Bonds and $493.865 million in series 2009C Build America Bonds.

The bonds (/AAA/AAA) will be sold on a negotiated basis with Merrill Lynch & Co. Inc. as the lead manager.

The 2009A bonds are due 2014 to 2016, and the 2009B bonds are due Aug. 15, 2044. The 2009C bonds are due 2017 to 2025 with a term bond due Aug. 15, 2039.

Proceeds will be used to construct new hospital facilities and renovate existing facilities.

Peralta Community College deal ahead

In other upcoming sales for the week, the Peralta Community College District of California is scheduled Tuesday to price $100 million in series 2009 general obligation utility bonds, said Tom Smith, vice chancellor for finance and administration, in an interview Monday.

The offering is the final sale for a taxpayer-approved $390 million financing plan. The other two bonds were sold in 2006 and 2007, Smith said.

"Interest rates have been trending down the past week or so, so we think that with our rating, we'll probably get a good rate," said Smith. "We did another refunding back last January and got some very excellent pricing."

The bonds will be sold through senior manager Stone & Youngberg LLC.

Proceeds will fund utility improvements throughout the district's colleges. The district is in the process of making major renovations of its colleges.

"We haven't done any major work in 20 or 30 years," Smith noted.

"It's [the bond sale] part of a large strategic plan to upgrade our facilities with technology and safety measures."

The community college district is based in Oakland, Calif.

Pasco County bonds come Wednesday

Also coming up, Pasco County in Florida is gearing up to price $141 million in series 2009 water and sewer revenue bonds and Build America Bonds Wednesday, said a sales calendar.

The bonds (Aa3/AA/AA-) will be sold on a negotiated basis with Morgan Keegan & Co. Inc.

The offering will consist of tax-exempt revenue bonds and federally taxable Build America Bonds, though the exact breakdown was unavailable Monday. The tax-exempt bonds are due 2013 to 2021. The Build America Bonds are due 2022, 2024, 2029, 2034 and 2039.

Proceeds will be used to fund improvements to the county's water and sewer system.

The county seat is Dade City, Fla.

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