Michigan State Building Authority prices $96.5 million in bonds to yield 3.02%

By Cristal Cody and Sheri Kasprzak

New York, Dec. 19 - The Michigan State Building Authority led new-issue municipal news on Wednesday, pricing $96.5 million in multi-modal revenue bonds, series I.

The authority had originally planned to price the bonds (AAA) at 3.05% on Thursday, according to Edward Woods, a spokesman for the issuer. But on advice from the underwriter, the authority decided to move up the pricing and was able to achieve a lower borrowing cost by fixing terms on Wednesday.

"The exciting news for us was we talked with JPMorgan's bond-selling desk on Monday to discuss the rate," Woods said in an interview Wednesday morning with Prospect News.

"We were going to initially price the bonds at 3.05% and the desk thought that, given what was happening in the market, we would ultimately pay interest of somewhere between 3.01% and 3.02%. To be aggressive, we determined we would initially price at 3.05% to see if we could get investor orders. On Tuesday afternoon, when we priced at 3.05%, we had orders for two and a half times the amount of bonds to be sold."

In response, the authority cut the interest rate and priced the bonds at 3.02%.

The bonds are due Oct. 15, 2042.

New York Dormitory bonds to price

Looking ahead, a $260 million issue of revenue bonds from the Dormitory Authority of the State of New York is expected to price in early 2008.

The authority did not immediately return calls to confirm the issue, but a news release from Fitch Ratings on Wednesday announced that the proposed series 2008 bonds were rated BB+.

Proceeds from the issue, the Fitch release said, will be used to finance the construction of a replacement hospital for the Orange Regional Medical Center and to fund a debt service reserve fund. The hospital is a 450-bed acute-care facility that operates two campuses in Middletown, N.Y. and Goshen, N.Y.

The bonds are expected to price around March 15, 2008 and Merrill Lynch & Co. is the lead manager.

Florida DEP bonds expected

An issue of $50 million in series 2007-A and $50 million in series 2007-B bonds from the Florida Department of Environmental Protection were expected to price on Wednesday.

The bonds (Aaa) are insured by Assured Guaranty Corp.

Another offering set to price Wednesday was a $92.395 million issue of Toho, Fla. Water Authority bonds (A1/A+/AA-).

Those bonds were talked at yields ranging from 3.85% to 4.1% on Tuesday.

Scheduled to price Thursday is an issue of $500 million in sales tax revenue bonds from the Puerto Rico Sales Tax Financing Corp.

Proceeds from the bonds (A1) will be used to repay debt obligations to the Puerto Rico Public Finance Corp.

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