Issuers seek to convert auction-rate bonds, price new deals to replace auction-rate securities

By Cristal Cody and Sheri Kasprzak

New York, March 31 - As issuers continue to escape from their auction-rate securities, more conversion announcements emerged on Monday and some are looking to price new offerings in an effort to replace auction-rate bonds.

In other news, the week kicked off with several new sales planned. A number of sizable deals are coming up in the next month, including a $2 billion sale of taxable general obligation bonds from the state of Connecticut.

Moving back to the auction-rate bonds, the Colorado Health Facilities Authority plans to convert $215 million in series 2005 auction-rate hospital revenue bonds (Aaa/AAA) sold for Poudre Valley Health Care Inc. and Medical Center of the Rockies.

The conversion impacts $50 million in series 2005A bonds due 2031, $83 million in series 2005B bonds due 2036 and $82 million in series 2005C bonds due 2040.

The 2005A bonds are set to convert April 15, the 2005B bonds on April 22 and the 2005C conversion on April 29.

Also coming up, the All Children's Hospital in Florida plans to submit bids Wednesday on the remainder of its $61.575 million in auction-rate bonds at a 2.21% interest rate, the now-current Sifma Municipal Swap Index, a notice released Monday said.

The series 2007A health facilities revenue bonds priced through the St. Petersburg Health Facilities Authority.

All Children's Hospital plans to continue until all the bonds are purchased to establish the lowest possible auction interest rate.

Citigroup Global Markets is the broker.

In other auction-bid news, Covenant Health in Tennessee said it will submit bids on its $160.5 million auction-rate bonds effective Monday, the board said in a notice.

The series 2006B bonds were sold for the hospital through the Health, Educational and Housing Facility Board of the County of Knox, Tenn.

Covenant Health plans to bid on $50 million subseries B-1 bonds, $50 million subseries B-2 bonds, $25 million subseries B-3 bonds and $35.5 million subseries Bb-4 bonds.

Auctions are held on Tuesday for series B-1 bonds, Wednesday for series B-3 bonds and Thursday for series B-2 and B-4 bonds.

The health care group intends to submit a 5.5% bid for up to 40% of the outstanding series B-3 bonds on April 2. The bonds are insured by Assured Guaranty Corp.

Afterward, the board will determine whether to convert the remainder of the B-3 bonds to another interest rate mode or continue to bid in the auctions.

Bid dates have not been set for the other series.

Morgan Keegan & Co. is the broker.

Sizable sales expected in April

Moving to upcoming offerings, several large deals were announced for pricing later this month, including the Connecticut offering mentioned above.

In the sale, the state plans to sell $1.6 billion in series 2008A Teachers' Retirement Fund current interest bonds and $400 million in series 2008B Teachers' Retirement Fund capital appreciation bonds (Aa3/AA/AA).

The 2008A bonds are due 2014 to 2028 with a term bond due 2032 and the series 2008B bonds are due 2014 to 2025.

The bonds will be sold on a negotiated basis through lead managers Bear, Stearns & Co., JPMorgan and Merrill Lynch.

Proceeds from the deal will be used to make a deposit to the Teacher's Retirement Fund.

Another large offering is a planned $346 million sale of bonds by Miami-Dade County in Florida for the University of Miami. The sale is expected on April 2.

The bonds will be sold through lead manager Morgan Stanley.

The bonds (A2/A-/) are due from 2015 to 2019 with a term bond due 2028.

Proceeds from the sale will be used to repay a bank credit facility used to finance the purchase of Cedars Medical Center.

Also ahead, Providence Health and Services in Washington expects to price $200 million series 2008 taxable commercial paper notes on Tuesday, the issuer told Prospect News.

The notes (P-1) probably will price in four tranches, said Sue Painter, chief investment officer and treasurer.

The notes may be dated to as long as six to nine months, she added.

"Depending on what the market appetite is, we may shorten it up or lengthen it to make sure they are attractive notes," she said.

Merrill Lynch & Co. will manage the negotiated sale.

Proceeds will be used to redeem series 2006 F and G taxable auction-rate securities.

Upcoming pricings

Clark University in Massachusetts plans to price $50.3 million variable-rate bonds sometime this week, the issuer told Prospect News on Wednesday.

The series 2008 bonds (Aaa//) will price in a weekly mode, said James Collins, executive vice president and treasurer of the university.

The bonds will price through the Massachusetts Development Finance Agency.

UBS Investment Bank will manage the negotiated sale.

Proceeds will be used to refund series 2000, 2002A and 2002B bonds, pay the termination fee on a swap for the series 2002A bonds and fund renovations of the Goddard Library.

Western Michigan University plans to price $123.795 million general revenue bonds on Thursday, a source said Monday.

The series 2008 bonds (A2) are expected to be insured by FSA (Aaa).

Lehman Brothers is the underwriter.

Proceeds will be used to refund the university's series 2000 and series 2002A general revenue bonds. The proceeds also may be used to pay the cost of terminating swaps for the series 2000 and series 2002A bonds.

Sale news

The Metropolitan Sewerage District of Buncombe County, N.C., was expected to price $33.635 million revenue refunding bonds on Monday.

The series 2008A bonds (Aa3/AA/AA) will price with a weekly interest rate.

The bonds are due July 1, 2031.

The university also plans to price $22.165 million series 2008B bonds on April 30.

The series 2008B bonds are due July 1, 2029.

Banc of America Securities is the underwriter for both series.

Proceeds will be used to refund the district's outstanding series 2004 revenue bonds and series 2005 revenue refunding bonds.

The Massachusetts Bay Transportation Authority was expected to price $302 million senior sales tax bonds.

The $242 million series 2008A-1 and A-2 variable-rate demand obligations (Aa2/VMIG 1) and the $60 million series 2008B fixed rate bonds (Aa2) were expected to price Friday, according to Moody's Investors' Service.

Proceeds will be used to refund various maturities of the authority's series 1998A general transportation system bonds from fixed rate to variable-rate demand obligations; the series 1974 and series 1995 general transportation system bonds; and to restructure principal payments due in 2008 and 2009 to lower debt service payments.

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