California State Public Works Board sells $805.21 million revenue bonds; munis end unchanged

By Sheri Kasprzak

New York, Oct. 22 - Municipals ended the day mostly unchanged while retaining a firmer tone as the State Public Works Board of California brought $805.21 million of bonds to market.

"There's not a lot of movement [in secondary]," said one trader reached in the afternoon.

"Everyone's kind of focused on primary. There's a huge supply over there, so things have been really quiet over here today."

Amid the primary action, California's State Public Works Board sold Thursday $805.21 million in series 2009 lease revenue bonds, said a pricing sheet.

The sale included $523.695 million in series 2009G-1 various capital project revenue bonds, $250 million in series 2009G-2 taxable Build America Bonds and $31.515 million in series 2009H taxable variable-rate bonds.

The series 2009G-1 bonds are due 2010 to 2026 with a term bond due 2030 with coupons from 2% to 5.75%. The 2009G-2 bonds are due 2034 with an 8.361% coupon, priced at par. The 2009H bonds are due 2010 to 2027 with a term bond due 2029.

Morgan Stanley & Co. Inc. and RBC Capital Markets Inc. were the senior managers.

Proceeds will be used to fund capital projects and improvements to the state's prisons and rehabilitation facilities.

"Yields on taxable bonds are higher than yields on tax-exempt bonds, but the 35% subsidy allows issuers to pay less net interest on BABs than the total interest they would pay if they sold the bonds tax-exempt," Tom Dresslar, spokesman for the state treasurer's office, said Thursday.

"Over the life of the BABs, taxpayers will save $37.6 million on interest, compared to the relevant market rate on California tax-exempt bonds."

As previously reported in Prospect News, the Build America Bonds were offered to institutional investors only. Retail investors bought only a small portion of the tax-exempt bonds.

"It doesn't surprise me," said one sellside source.

"Even institutional, I think, has backed off. California bonds have an inherent risk right now, so it makes sense. Retail hesitated and institutional, to some degree, hesitated."

Riverton sells IHC bonds

Elsewhere, Riverton, Utah, priced $250 million in series 2009 hospital revenue bonds for IHC Health Services Inc., said a pricing sheet.

The bonds (Aa1/AA+/) were sold through senior managers J.P. Morgan Securities Inc. and Wells Fargo Securities Inc.

The bonds are due 2017 to 2020 with term bonds due 2013, 2015, 2036 and 2041.

Proceeds will be used to construct, equip and improve facilities operated by IHC.

Suffolk County brings two bonds

In other pricing news, Suffolk County, N.Y., priced Thursday $113 million in series 2009 tax anticipation notes, said a statement from county comptroller Joseph Sawicki Jr.

The TANs are due September 2010 and have a 0.39% coupon, priced at par.

Proceeds from the sale will fund cash flow needs ahead of the receipt of delinquent property taxes.

"These are the lowest rates received in county history," Sawicki said in a statement.

"Once again, the county's superior credit ratings attracted numerous bidders which resulted in lower interest rates and significant costs savings for Suffolk County residents."

The county also priced on Thursday $158.2 million in series 2009 public improvement bonds, said a statement from the county comptroller's office.

The bonds are due 2028 and priced at a net interest cost of 3.92%.

Proceeds will be used to fund the construction of a new county jail in Yaphank, N.Y., fund open space acquisitions under the Drinking Water Protection Program and fund various capital improvements.

The county seat is Riverhead, N.Y.

California to bring $3 billion

Looking to the week ahead, the State of California is gearing up to sell $3 billion in series 2009 economic recovery refunding bonds on Thursday, according to a sales calendar.

The offering will be conducted in two tranches: $2.6 billion of series 2009A refunding bonds and $400 million of series 2009B refunding bonds.

Barclays Capital Inc. is the senior manager for the negotiated deal.

A retail order period for the bonds (//A) will be conducted Tuesday and Wednesday.

Proceeds will be used to refund existing economic recovery bonds.

Also in the Golden State, the Bay Area Toll Authority of California plans to price $1.3 billion in series 2009 Build America Bonds on Wednesday, said a sales calendar.

The bonds (Aa2/AA/AA) will be sold through senior manager Citigroup Global Markets Inc.

The bonds are due 2049.

Proceeds will be used to fund transportation improvements.

Catholic Health sale planned

Coming up on Wednesday, Catholic Health Care West plans to price $753.365 million in series 2009 health facility revenue bonds, said a sales calendar.

The sale includes $183.99 million in series 2009D revenue bonds and $36.315 million in series 2009E variable-rate revenue bonds through the Arizona Health Facilities Authority as well as $427.87 million in series 2009E revenue bonds and $105.19 million in series 2009F and 2009G variable-rate revenue bonds through the Colorado Health Facilities Financing Authority.

The bonds will be sold through senior managers Citigroup and JPMorgan.

Proceeds will be used to fund existing debt or refinance capital projects at Catholic Health facilities.

Connecticut plans deal

Elsewhere, the State of Connecticut plans to sell its previously announced $550 million in series 2009 transportation infrastructure purposes special tax obligation bonds on Wednesday, said a sales calendar.

The bonds will be sold through senior manager Siebert Brandford Shank & Co. LLC.

The sale includes $250 million in series 2009A bonds, $250 million in series 2009B taxable bonds and $50 million in series 2009C bonds.

The 2009A bonds are due 2010 to 2019, and the 2009B bonds are due 2020 to 2029. The 2009C bonds are due 2010 to 2014.

Proceeds will be used to fund transportation infrastructure projects and refund existing debt.

Also in the northeast, the New York Water Finance Authority is set to sell $500 million in series 2010 water and sewer system second general resolution Build America Bonds on Wednesday, said a sales calendar.

Barclays Capital is the senior manager for the bonds.

Proceeds will be used to fund capital improvements to the city's water and sewer system.

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