Some issuers back to business despite shaky market; New York City water authority to sell $200 million

By Sheri Kasprzak

New York, Oct. 17 - Even though the muni market may not have stabilized yet, some issuers are moving forward - at least tentatively - with planned offerings. Still, some sell-side sources said Friday that their issuer clients are wary about conditions.

"It really is about how much it's going to cost the average issuer to raise their capital," said one sell-side source.

"And right now, it's just too much. I think, also, if an issuer has enough in reserves, they're not going to move forward if they can help it."

Still, with yields jumping to over 6% for 20-year bonds, there is a market from retail investors, which jumped at the chance to cash in on California's $5 billion in revenue anticipation notes priced earlier this week. In fact, the state was able to upsize the sale twice in response to retail demand.

Postponed deals ahead

Some issuers said Friday that they're moving forward in the coming week with deals that had been put on hold in September.

The City of Chicago, for example, is preparing to price $190 million in series 2008 second-lien wastewater transmission revenue refunding bonds, said a calendar of upcoming sales. It's an offering the city had expected to price in September. When market conditions went sour, the deal was pulled, said a sell-sider connected to the deal.

The bonds (/AAA/A-1/AA-) will be sold sometime this month on a negotiated basis with Cabrera Capital Markets and RBC Capital Markets as the senior managers.

The sell-sider said the offering could price in the next few weeks, but no exact date has been set at this time.

The sale includes $160 million in series 2008A bonds and $30 million in series 2008B bonds.

Proceeds will be used for capital improvements and extensions to the city's wastewater transmission system, refunding all or a portion of the city's outstanding wastewater transmission bonds and a deposit to a debt service reserve fund.

Another sale that was pushed back but may be pricing in the next few weeks is a $56.62 sale of series 2008 water revenue bonds from the Brentwood Infrastructure Finance Authority, the issuer said Friday.

The pricing date on the bonds, said a source at the issuer, has been pushed back a few times due to market conditions, but the sale is expected to go through in the coming weeks.

"We're looking at it on a day-to-day basis," said the issuer source.

The bonds (/AA/) will be sold through senior manager RBC Capital Markets.

Proceeds will be used for improvements to the city's water system.

New York City water sale

Elsewhere in upcoming deals, the New York City Municipal Water Finance Authority is planning to price $200 million in series 2009A water and sewer system revenue bonds later this month, said Raymond Orlando, spokesman for the authority Friday.

The exact pricing date for the deal has not yet been determined.

The bonds (Aa1/AAA/AA+) will be sold on a negotiated basis with M.R. Beal & Co. as the senior manager.

Proceeds will be used for construction on improvements to the city's water and sewer system, as well as for a deposit to a debt service reserve fund.

Colorado Health offering planned

Moving to the healthcare sector, the Colorado Health Facilities Authority is scheduled to price $55.515 million in series 2008 hospital revenue bonds on Oct. 27, a sell-side source confirmed with Prospect News Friday.

The bonds (//AA/F1) will be sold on a negotiated basis with Wachovia Bank as the senior manager.

The sale includes $39.085 million in series 2008A bonds and $16.43 million in series 2008B bonds. The bonds initially bear interest at the daily rate, but may be converted a weekly, long-term, bond interest-term or auction-rate mode.

Proceeds will be used to refund the authority's series 1993 bonds and make improvements to hospital facilities.

Trinity Health to sell $159 million

Also looking a bit further ahead, the Trinity Health Credit Group in Michigan is set to sell $159.135 million in series 2008A revenue and refunding bonds on Oct. 28, the issuer said Friday.

"We're not sure if they will price then, but that's where we are now," said an issuer source Friday evening.

The bonds (Aa2//AA) will be sold on a negotiated basis with Merrill Lynch and Goldman, Sachs & Co. as the senior managers.

The deal includes $89.135 million in series 2008A-1 bonds and $70 million in series 2008A-2 bonds.

Proceeds will be used to reimburse the group for certain capital expenses, as well as to refund outstanding obligations of the Michigan State Hospital Finance Authority.

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