California may be stuck with premium to maintain cash flow; Austin prices $170.605 million

By Cristal Cody and Sheri Kasprzak

New York, May 14 - The state of California grabbed muni headlines on Wednesday with news from State Treasurer Bill Lockyer that the state may have to pay a premium to price securities if its budget is not completed on time.

Lockyer said in a statement released Wednesday that his office is reviewing the revenue and debt assumptions used to support the governor's revised 2008-2009 state budget plan released on Wednesday. The plan includes a statewide lottery proposal.

The best thing the governor and lawmakers from both parties can do is work together to produce a balanced and on-time budget, he said.

"A late budget could force the state to pay a premium of $100 million or more to issue securities to help us maintain cash flow," he said.

"And if we once again show we can't enact a budget on time, Wall Street rating agencies could give California another rap on the knuckles. That doesn't help taxpayers when the state goes to the bond market."

Austin prices at 1.7% rate

Austin, Texas, and the city's Water and Sewer Enterprise priced $170.605 million variable-rate revenue refunding bonds with an initial 1.7% rate on Wednesday, the issuer's financial adviser told Prospect News.

"We went out with a rate of 1.8%. They came back and the bonds were four times oversubscribed, so they lowered the rate to 1.7%," said Chris Allen, senior managing consultant with Public Financial Management.

The series 2008 bonds (Aa3/A+/AA-) reset weekly.

Goldman, Sachs & Co. managed the negotiated sale.

Proceeds will be used to refund $66.22 million series 1997 combined utility revenue refunding bonds and $64.845 million series 2001A and $27.74 million series 2001B water and wastewater revenue refunding bonds.

CareGroup delays sale

In other news, CareGroup Inc. pushed back the pricing date for $538.455 million revenue and refunding bonds to May 21, a sell-side source said Wednesday.

The series 2008 bonds (A3//) will price through the Massachusetts Health & Educational Facilities Authority. The bonds had been scheduled to price this week.

Citigroup Global Markets is the senior manager of the negotiated sale.

Proceeds will be used to provide $150 million of new money for capital projects at the system's four hospitals. The proceeds also will be used to refund the $61.7 million series 1992G2 bonds; $3.8 million series 1993F bonds; $4 million series 1996H1 bonds; $9.2 million series 1996H2 bonds; $35 million series 1998B1 bonds; $40 million series 1998B2 bonds; $68.575 million series 2004C1 bonds; $69.5 million series 2004C2 bonds and $49.05 million series 2004D bonds.

The Kansas Department of Transportation was expected to price $150.87 million revenue bonds on Wednesday.

The series 2008 adjustable tender highway revenue bonds (Aa2//AA) initially will price with a weekly interest rate.

Calls for additional information were not immediately returned.

The sale includes $23 million series 2008A-1 bonds, $38.9 million series 2008A-2 bonds, $595,000 series 2008A-3 bonds, $50.275 million series 2008A-4 bonds and $38.1 million series 2008A-5 bonds.

Wachovia Bank is the senior manager for the series 2008A-1, 2008A-2, 2008A-5 bonds, and Merrill Lynch & Co. is the senior manager for the series 2008A-3 and 2008A-4 bonds.

Proceeds will be used to make capital improvements for the department's highway projects.

Grossmont-Cuyamaca bonds price

Elsewhere in pricing news, the Grossmont-Cuyamaca Community College District of California priced $190 million in bonds, district spokeswoman Della Elliott confirmed.

The bonds (Aa3/AA-/) were sold on a negotiated basis through lead manager Citigroup Global Markets, but the full terms of the sale were not immediately available.

The proceeds from the sale will be used for repairs, improvements and expansions to the classrooms and labs at Grossmont College and Cuyamaca College.

Energy Northwest to price $273.27 million

In other pricing news, Energy Northwest in Oregon had been expected to price $273.27 million in series 2008D and 2008E revenue refunding bonds Wednesday. Calls to the issuer were not returned by press time.

The sale was to be conducted through lead managers Goldman, Sachs & Co. and Citigroup Global Markets.

The offering included $72.31 million in series 2008D project 1 electric revenue refunding bonds, $127.955 million in series 2008D Columbia Generating Station electric revenue refunding bonds and $64.54 million in series 2008D project 3 electric revenue refunding bonds. The deal also included $2.17 million in series 2008E project 1 electric revenue refunding bonds, $3.685 million in series 2008E Columbia Generating Station electric revenue refunding bonds and $2.61 million in series 2008E project 3 electric revenue refunding bonds.

The proceeds from the deal will be used to refund prior bonds.

Broward County School to price COPs

Looking to upcoming sales, the Broward County School Board in Florida plans to price $275.375 million certificates of participation on June 4, a source said Wednesday.

A retail order period will be held June 3 for the series 2008A COPs.

The COPs (A1//A+) have serial maturities from 2012 through 2033.

Proceeds will be used for constructing one new school, two school completions, eight school additions and other projects such as cafeterias, swimming facilities and a physical education facility.

Also pricing on June 4 is the Boone Hospital Center in Missouri, which expects to sell $100 million revenue bonds, a source said Wednesday.

The series 2008 fixed-rate revenue bonds (A3//) will price through Boone County, Mo.

Stern Brothers is the underwriter.

Proceeds will be used to finance a portion of the construction of the new patient bed tower and parking structure projects.

San Francisco plans G.O. refunding bonds

The city and county of San Francisco intend to price $274.43 million general obligation refunding bonds (Aa3/AA/AA-) in competitive sales on Tuesday, according to a sale notice.

The $234.285 million series 2008R1 bonds have serial maturities from 2009 through 2021. The $40.145 series 2008R2 bonds have maturities from 2009 through 2018.

Backstrom McCarley Berry & Co. and Montague DeRose and Associates are the co-financial advisers.

Proceeds will be used to refund a portion of outstanding G.O. bonds in order to reduce the city's overall debt service payments.

Doctors Hospital to price bonds

In other upcoming deals, the Doctors Community Hospital in Maryland plans to price $59.17 million in series 2008 hospital revenue bonds next week, said a source at the issuer.

The bonds (Baa2//) will be sold through the Maryland Health & Higher Educational Facilities Authority. The bonds are variable-rate demand bonds.

"We're not exactly sure when the bonds are going to price, but we are aiming for sometime next week [the week of May 19]," the source said.

UBS Securities is the senior manager for the negotiated sale.

Proceeds will be used to finance the majority of a planned new private bed six-story patient tower and other capital expenses.

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