Colorado Health Facilities delays revs because of high spreads; Missouri Highways brings $150 million

By Aaron Hochman-Zimmerman and Sheri Kasprzak

New York, Nov. 17 - Even though retail investors may be crawling out of the woodwork to invest in munis, some issuers are still backing off their planned sales, citing less-than-ideal market conditions.

So was the case with the Colorado Health Facilities Authority on Monday. The authority had been slated to sell $55.515 million in series 2008 hospital revenue bonds (//AA/F1) but pushed the sale to a day-to-day basis as spreads continue to widen, especially for the health-care sector.

"It really is tough, especially for health-care providers," said one sellside source reached Monday afternoon.

"Spreads are just getting crazy. On the long end, particularly, you're seeing yields close to 7% at this point. Some issuers are saying, 'Forget it.' It's really just a function of a bad economy."

An example of this comes from the Daughters of Charity Health System in California, which priced $143.655 million in series 2008A revenue bonds late last week with yields sailing over 8%, according to an official statement.

The bonds, due 2019, 2028 and 2038, all priced at par. The 2019 bonds priced with an 8% coupon, the 2028 bonds an 8.25% coupon and the 2038 bonds an 8.375% coupon.

Citigroup Global Markets was the lead manager.

Proceeds will be used to refund the health system's outstanding series 2005B-1 through 2005B-5 bonds.

In the Colorado sale, the bonds are still expected to price at some point this year, a sellside source connected to the bonds said Monday.

"The spreads are higher than they wanted them to be," said the sellside source.

"It's tough to lock in spreads this wide."

The 2008 hospital revenue bonds are expected to bear interest at the daily rate, and proceeds will refund the authority's series 1993 bonds. The remainder of the proceeds will be used for improvements to hospital facilities.

The deal includes $39.085 million in series 2008A bonds and $16.43 million in series 2008B bonds.

Missouri Highways sale

In other pricing news, the Missouri Highways and Transportation Commission successfully priced $150 million in series 2008A federal reimbursement state road bonds on Monday, said Ben Reeser, finance coordinator for the Missouri Department of Transportation. The sale was made entirely to retail investors.

The bonds (Aa2/AA/AA-) were sold on a negotiated basis with Citigroup Global Markets as the senior manager.

The bonds are due 2011 to 2025 with coupons from 3% to 5% and yields from 2.61% to 4.97%.

The true interest cost came in at 4.5%.

Proceeds will be used to reimburse the state for the costs of road improvements.

New York deal ahead

Looking ahead to this week's pricing action, the City of New York is expected to price $425 million in series 2009F general obligation bonds, according to a preliminary official statement. The sale is expected to take place this week, though no exact pricing date could be determined by press time Monday.

The bonds will be sold on a negotiated basis with Merrill Lynch & Co. as the senior manager.

The sale includes $400 million in series 2009F-1 bonds and $25 million in series 2009F-2 bonds. Both series are due from 2010 to 2031.

Proceeds will be used for capital expenditures in the city.

D.C. to sell $400 million

In another offering planned for this week, the District of Columbia is scheduled to sell $400 million in series 2008 G.O. tax and revenue anticipation notes Thursday, according to a preliminary official statement released Monday.

The notes (MIG 1/SP-1+/F1+) will be sold on a negotiated basis with Loop Capital Markets and Morgan Stanley as the senior managers. Phoenix Capital Partners and Public Resources Advisory Group are the financial advisers.

The notes are due Sept. 30, 2009.

Proceeds will be used for capital expenditures ahead of the collection of some taxes and revenues.

Miami-Dade deal

Another large offering this week comes from Miami-Dade County of Florida, which is expected to price its previously announced $301.39 million in series 2008C water and sewer revenue bonds, said a calendar of upcoming deals.

The bonds (A1/A+/A+) will be sold on a negotiated basis with RBC Capital Markets as the senior manager. The bonds are due 2009 to 2025.

Proceeds will refund all of the county's series 2005 variable-rate demand bonds and fund an increase in the reserve account requirement resulting from the sale.

On Thursday, the Mountain States Health Alliance in Virginia and Tennessee is planning to price $80 million in series 2008 hospital revenue bonds (Baa1/BBB+/), said a preliminary official statement.

The sale includes $5.615 million in series 2008C bonds sold through the Health and Educational Facilities Board of the City of Johnson, Tenn.; $5.74 million in series 2008D bonds sold through the Industrial Development Authority of Smyth County, Va.; and $68.645 million in series 2008E bonds sold through the Industrial Development Authority of Washington County, Va.

The bonds are due 2009 to 2018 with term bonds. The maturities for the term bonds have not been determined at this time.

Merrill Lynch is the senior manager for the negotiated offering.

Proceeds will be used for refinancing debt for the respective authorities and financing the construction of hospital facilities.

Ohio Air Quality offering

Also coming up this week, the Ohio Air Quality Development Authority is planning to price $123 million in series 2008 pollution control revenue bonds for First Energy Corp. on Wednesday, said a sales calendar.

The bonds will be sold on a negotiated basis with Banc of America Securities as the lead manager.

Proceeds will be used for air pollution prevention efforts throughout the State of Ohio.

Also coming up this week, Bossier City, La., is expected to price its long-anticipated $125 million in series 2008 utilities revenue bonds, said a calendar of sales.

The bonds (A3/AA-/) will be sold through senior manager Merrill Lynch.

The bonds are due from 2009 to 2028 with term bonds due 2028 and 2033.

Proceeds will be used to make additions, improvements, extensions and repairs to the waterworks plant and sewer utility system as well as to make a deposit to a debt service reserve fund.

Pennsylvania's G.O. sale

Looking a bit further ahead, the Commonwealth of Pennsylvania is gearing up to price $600 million in second series 2008 G.O. bonds on Dec. 9, said a preliminary official statement.

The bonds will be sold competitively with Public Financial Management as the financial adviser.

The bonds are due from 2010 to 2029.

Proceeds will be used for capital facilities projects and for green facilities projects.

Also ahead, the Louisiana Public Facilities Authority is expected to price $100 million in series 2008 revenue bonds for Cleco Power LLC, said a preliminary official statement.

The bonds, which are due Dec. 1, 2038, will be sold on a negotiated basis with KeyBanc Capital Markets and Morgan Keegan & Co. as the senior managers.

The bonds will initially bear interest at the term rate.

The pricing is expected to take place in December.

Proceeds will be used for acquiring, constructing, improving or renovating nonresidential real property in the Gulf Opportunity Zone.

Secondary remains active

Meanwhile, in secondary market action, traders said activity remains fairly heavy, especially with long-end bonds.

"We're seeing quite a bit for 30-year to 40-year bonds," said one trader.

"I'm not seeing any particular sector, necessarily, trading more than another. We've seen housing stuff, transportation, health care. It's been a full range today. Lots of activity."

Another trader agreed that action is picking up, but no sector is dominating secondary trading.

"It's all across the board, really," he noted.

New Jersey Transportation Trust Fund Authority's series 2008A transportation system bonds were in play Monday. The 5.5% 2038s were seen trading at 5.57%, according to a trader. The 5.75% 2031s were seen at par, the 5.375% 2025s were seen at 5.44% and the 5.25% 2023s were seen at 5.249%.

Elsewhere, the Cleveland Clinic Health System Obligated Group of Ohio's 5.125% 2027s were seen trading between 5.57% and 5.62%.

Also on Monday, the State of Illinois' series 2008 G.O.s were trading. The 5% 2033s were seen trading at 5.296%.

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