Despite shaky market conditions, heavy pricings continue; Michigan Tobacco prices $202.408 million

By Cristal Cody and Sheri Kasprzak

New York, June 26 - Even though issuers agree it's been tough going for pricing new issue munis these past few weeks, some are catching windows of opportunity to get their deals done.

One issuer told Prospect News Thursday that conditions were favorable for its bond sale, and another noted that the municipals market has "deteriorated" in the past few weeks.

Heading up the pricing action was $202.408 million in tobacco settlement asset-backed bonds from the Michigan Tobacco Settlement Finance Authority. The bonds priced with an 8.2% true interest cost in a tough market, said Wayne Workman, managing director of Robert W. Baird and Co., the authority's financial adviser.

"The market for municipals has deteriorated over the last several weeks and in particular, the tobacco market has rapidly deteriorated due to a number of factors," including Standard & Poor's revisions for tobacco bond ratings, he said.

The $114.86 million series 2008A fixed-rate current interest turbo term bonds (Baa3//BBB+) priced with a 6.875% coupon to yield 7.1%.

The bonds are due June 1, 2038.

The $29.875 million series 2008B capital appreciation turbo term bonds (//BBB) due June 1, 2058 priced to yield 8.5%.

The $57.674 million series 2008C capital appreciation turbo term bonds (//BBB-) due June 1, 2058 priced to yield 8.75%.

The entire issue is projected to pay off in 2033, he said.

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

Proceeds will be used to pay $60 million for a deposit to the state's general fund and to refund the authority's series 2006B and 2006C indexed floating-rate turbo term bonds.

Colorado prices $350 million TRANs

Colorado priced $350 million general fund tax and revenue anticipation notes with a 1.71% net interest cost on Thursday, said a source familiar with the sale.

The series 2008A notes (/SP-1+/F-1+) are due June 26, 2009.

Morgan Stanley won the bidding on $235 million of the bonds in a competitive sale with a 3% coupon to yield 1.69% to 1.7%.

Citigroup Global Markets won the bidding on $115 million of the bonds with a 3% coupon to yield 1.68% to 1.69%.

Proceeds will be used to fund anticipated cash flow shortfalls in the general fund for the fiscal year ending June 30, 2009.

Highland Park Independent School District

Highland Park Independent School District in Texas priced $70 million building bonds in a competitive sale won by Prager, Sealy & Co. on Thursday, a sellside source told Prospect News.

"All those bonds were placed with institutions, insurers and money managers with no reofferings," the source said.

The series 2008 bonds have serial maturities from 2009 through 2028.

The final pricing terms will not be available until Friday.

Proceeds will be used to acquire property and to fund construction, renovations and equipment for school buildings.

California's $1.5 billion bonds

California released details of the sale of $1.5 billion general obligation bonds that priced with 3% to 5.5% coupons to yield 2.7% to 5.3%.

The bonds (A1/A+/A+) have serial maturities from 2010 through 2031 with terms due 2034, 2036 and 2038.

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

Proceeds will be used to finance projects, including for seismic safety, clean water and education, to refund outstanding commercial paper notes and to repay internal state loans.

Indianapolis Airport sale

Elsewhere, the Indianapolis Airport Authority released the details of its $350 million sale of series 2008C variable-rate revenue bonds.

Jeremiah Wise, assistant project director for the authority, said the bonds priced Wednesday with a 1.85% initial rate.

"I think we're very happy where it was," Wise said when asked how the offering went given current market conditions. "The market worked very efficiently where we priced. There's a good appetite for that kind of paper in the market."

The sale included $100 million in series 2008C-1 bonds due 2037, $100 million in series 2008C-2 bonds due 2036, $50 million in series 2008C-3 bonds due 2033, $10 million in series 2008C-4 bonds due 2033, $20 million in series 2008C-5 bonds due 2033, $20 million in series 2008C-6 bonds due 2033 and $50 million in series 2008C-7 bonds due 2033. The rate resets weekly.

The bonds (A1//A+) were sold on a negotiated basis with Goldman, Sachs & Co. as the lead manager.

Proceeds will be used for the construction of a new terminal building.

New York LGA bonds

In other news, the New York State Local Government Assistance Corp. priced $339.675 million in senior-lien refunding bonds (Aa3/VMIG1//), said a sellside source connected to the deal. The pricing terms were not available Thursday.

The bonds bear interest at the weekly rate.

The sale includes $52.73 million in series 2008B-AV bonds, $52.755 million in series 2008B-BV bonds, $52.73 million in series 2008B-CV bonds, $52.755 million in series 2008B-DV bonds and $188.705 million in series 2008B-BV2 bonds.

Proceeds will refund the corporation's series 2003A variable-rate bonds and series 2004A auction-rate bonds.

Also on Thursday, the North Texas Municipal Water District was expected to price $110.455 million in series 2008 revenue bonds.

The bonds were sold on a competitive basis.

Calls to the issuer for the terms were not immediately returned.

First Southwest Co. is the financial adviser.

Jacksonville plans deal

In other news, Jacksonville, Fla., plans to price $136.71 million variable-rate capital projects revenue bonds on Monday, a source with the issuer said Thursday.

The $68.355 million series 2008A and $68.355 million series 2008B bonds (A1//) will price initially with a weekly interest rate.

Proceeds will be used to refund the city's outstanding series 1997-1, 1997-2, 1997-3 and 2002-1 variable-rate capital projects revenue bonds to remove insurers with downgraded ratings.

Northern California Power sale

Elsewhere, the Northern California Power Agency intends to price $90 million series 2008C and 2008D hydroelectric project No. 1 revenue bonds on July 9, a source with the agency said Thursday.

The sale was delayed to allow the addition of another series that will be refunded.

The agency plans to refund series 2002A, 2002B, 2003A and 2003B refunding revenue bonds on July 24.

The series 2008C and 2008D bonds (A1/A+/) are insured by Assured Guaranty Corp.

Citigroup Global Markets will manage the negotiated sale.

On Monday, the Nevada System of Higher Education intends to price $61.21 million universities revenue bonds in a competitive sale, a source told Prospect News.

The series 2008A bonds have serial maturities from 2009 through 2038.

GNA Consulting Group is the financial adviser for the bond sale.

Denver plans offering

Also coming up, the City and County of Denver intends to sell $85 million in series 2008B airport system revenue bonds on June 30, said a sellside source familiar with the deal.

The bonds (Aaa/VMIG1//AA+) will be sold on a negotiated basis with Wachovia Bank as the senior manager.

The bonds initially bear interest at the weekly rate and may be converted to the daily, monthly, semiannual, term, fixed, flexible or auction-rate modes.

Proceeds will be used to refund the airport system's outstanding bonds.

Frederick Memorial's deal

Moving to other upcoming deals, Frederick Memorial Hospital in Maryland plans to sell $73.6 million in series 2008 revenue bonds on July 9, said a source at the issuer.

The bonds (Aaa/VMIG1//AA-/F1+) will be sold on a negotiated basis with Banc of America Securities and BB&T Capital Markets as the underwriters.

The bonds initially bear interest at the weekly rate.

Proceeds will be used to refund the hospital's outstanding series 2006A and 2006B revenue bonds.

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