Texas Transportation Commission, University of California sell billions; market stays unmoved

By Aaron Hochman-Zimmerman and Sheri Kasprzak

New York, Aug. 19 - Two major offerings came to market Wednesday while secondary remained stagnant, municipal market insiders reported.

Buzz around billion-dollar sales from the Texas Transportation Commission and the Regents of the University of California dominated the day's action.

One trader reported that the University of California performed well in pricing.

"It's another good credit," said trader Anthony Shields, a senior vice president of Grigsby & Associates.

Meanwhile, another trader said the muni market couldn't find enough momentum to make gains, but at the same time the market did have some strength.

"It feels firm today, but we're mostly unmoved," said the trader, who was reached in the afternoon.

"There is almost nothing trading today. Everyone is looking at those big offerings in primary, so it's been slow for us."

Meanwhile, another trader reported that the municipal market's appetite for new paper seemed boundless again on Wednesday.

"It all worked out well," Shields said.

"The hits keep happening; it just keeps grinding higher."

Shields noted that the upsized $1.262 billion in public income tax bonds and Build America Bonds from the Dormitory Authority of the State of New York was another success for the week.

"I thought people were getting sick of the name," Shields said, on top of questions over the sustainability of income tax revenues on which the bonds are based.

"It priced 50 bps off the AAA scale," he said, and the buyers arrived.

Summer hours

"There's a little bit of an August mentality," Shields reported of the market's recent feel. "There's only three trading days" a week, he said.

"[Monday and Friday] we're off, even though we sit here," he said.

Tuesday and Wednesday are reserved for the primary market, and on Thursday issues traded, he said.

Still, trading volumes are low.

Shields said that about 25% of his inventory is typically turned over in one session; however, lately the rate of turnover has been halved.

"It takes a little longer to sell bonds," he said.

When issues do trade, they trade higher.

"They bumped the scale again today," he said.

Nothing seems to be obstructing the market's climb, Shields said, but JPMorgan reportedly lent California $1.5 billion.

"That will get them through the next week or so," Shields joked, but added that California's story may be closely watched by the market in the coming weeks.

Texas Transportation drives bonds

Moving back to those Texas Transportation bonds, the commission priced $1.748 billion series 2009 Build America Bonds at par, according to a market source.

The bonds due 2029 priced to yield 5.367%, and the bonds due 2037 priced to yield 5.517%.

Merrill Lynch & Co. Inc. acted as lead underwriter for the negotiated deal, which was upsized from $1.112 billion.

Proceeds will be used to construct, acquire, improve and expand state highways.

The commission is located in Austin.

University of California prices

The day's other billion-dollar sale came from the Regents of the University of California. The university sold $1.345 billion in series 2009 general revenue and Build America Bonds, said a source close to the offering.

The bonds (Aa1/AA/) are being sold through lead manager Barclays Capital Inc.

The deal included $1.045 billion in Build America Bonds and $300 million in tax-exempt general revenue bonds.

The Build American Bonds are due 2031 and 2043. The 2031 bonds have a 6.2% coupon, priced at par, and the 2043 bonds have a 5.7% coupon, also priced at par.

The tax-exempt bonds are due 2012 to 2029 with term bonds due 2034 and 2040. The coupons range from 4% to 5% with yields from 1.22% to 5.02%.

In reoffering, the 6.2% 2031s were seen at 5.97% in the late afternoon. The 5.7% 2043s were seen at 5.775%.

Proceeds will be used to fund capital projects at the university's 10 campuses.

Pima IDA sells $176.3 million

Also in Wednesday's primary action, the Industrial Development Authority of Pima County in Arizona sold $176.3 million in series 2009A metro police facility lease revenue bonds, said a sellside source close to the deal.

The bonds (Aa3/AA/) were sold through lead manager RBC Capital Markets Corp.

The bonds are due 2012 to 2024 with term bonds due 2026, 2028, 2031, 2039 and 2041. The coupons range from 3% to 5.5%, and the yields range from 2.17% to 5.72%.

Proceeds will be used to construct improvements at police department facilities.

The Pima County seat is Tucson.

Children's Hospital of Wisconsin prices

The Wisconsin Health and Educational Facilities Authority announced the pricing of a $152.3 million series 2008B restructuring bond (Aa3/AA-/) at a true interest cost of 5.42% on behalf of the Children's Hospital of Wisconsin, according to a market source.

The bonds carry serial maturities from 2017 to 2019 and term bonds due 2024, 2029 and 2037.

Goldman, Sachs & Co. acted as underwriter for the negotiated bonds.

Proceeds will be used to restructure existing debt.

The authority is located in Brookfield, Wis., and the hospital is located in Minneapolis.

Miami-Dade brings bonds

In other pricing news, the County of Miami-Dade County in Florida priced $83.28 million in series 2009 public facilities revenue bonds on Wednesday for Jackson Health System, said a pricing sheet.

The bonds (A1/A/) were sold through lead manager Morgan Keegan & Co. Inc.

The bonds are due 2010 to 2024 with coupons from 4% to 5.25%. The deal also included term bonds due 2029, 2034 and 2039. The 2029 bonds have a 5.5% coupon, priced at 99.04, and the 2034 bonds have a 5.625% coupon, priced at 98.351. The 2039 bonds have a 5.75% coupon, priced at 99.285.

Proceeds will be used to reimburse the Public Health Trust of Miami for certain improvements at Jackson Health System hospitals.

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