Munis give back gains; Trinity Health brings $257.5 million; Tennessee hits 11% savings

By Sheri Kasprzak

New York, Oct. 13 - Municipal bonds backed off the gains achieved on Tuesday, with yields rising by 1 to 2 bps, said a trader.

"We're a little off today," said the trader reached in the afternoon.

"Looks like those intermediate bonds that did so well yesterday are giving back the gains. The rest of the curve is pretty flat."

Over in the primary market, Trinity Health Credit Group led pricing action with its $257.56 million sale of series 2010 revenue and revenue refunding bonds (Aa2/AA/AA).

The offering was conducted through a variety of issuers.

The Michigan Finance Authority priced $136.25 million in series 2010A revenue refunding bonds, which are due 2012 to 2020 with term bonds due 2025 and 2027. The serial coupons range from 3% to 5%. The 2025 bonds have a 4% coupon and the 2027 bonds have a 5% coupon.

The Indiana Finance Authority priced $65.25 million in series 2010B revenue and refunding bonds. The bonds are due 2019 to 2020 with term bonds due 2028 and 2037. The coupons range from 3.25% to 5%. The 2028 bonds have a 4.25% coupon and a 5% coupon. The 2037 bonds have a 4.5% coupon and a 5% coupon.

Franklin County, Ohio, sold $25.415 million in series 2010C revenue and refunding bonds, which are due 2011 to 2014 with a term bond due 2037. Coupons range from 2.5% to 3%. The 2037 bonds have a 4.5% coupon.

The Idaho Health Facilities Authority brought $27.86 million in series 2010D revenue bonds. Those bonds are due 2037 with a 4.5% coupon.

The Hospital Facility Authority of the City of Ontario, Ore., priced $20.785 million in series 2010E bonds, which are due 2037 with a split maturity. The bonds have a 4.5% coupon and a 5% coupon.

Bank of America Merrill Lynch and Goldman, Sachs & Co. were the joint bookrunners for the deal.

Trinity Health will used the proceeds to finance improvements to its facilities, as well as refinance all or a portion of its Michigan, Iowa, Indiana, California and Ohio bonds.

Tennessee G.O.s price

Down South, the State of Tennessee came to market with $231.445 million in an upsized offering of general obligation bonds (Aaa/AA+/AAA), said Mary-Margaret Collier, director of the Office of State and Local Finance. The deal size was increased from $213.315 million.

"We achieved an 11% present value savings [on the refunding]," said Collier in an interview.

"We're thrilled."

The sale included $186.505 million in series 2010A G.O.s and $44.94 million in series 2010B G.O. refunding bonds.

Collier said the state took advantage of the 3.05% interest rate to borrow additional funds.

"We had a segment in our notice of sale that we could increase the size by up to 10%," she pointed out.

The 2010A bonds are due 2012 to 2031 with 3% to 4% coupons. The 2010B bonds are due 2012 and 2019 to 2023 with coupons from 2% to 4%.

Bank of America Merrill Lynch won the series 2010A bonds with a 3.05668% true interest cost and BMO Capital Markets won the series 2010B bonds with a 2.738421% TIC.

Proceeds will be used to fund capital projects, as well as retire commercial paper.

Virginia brings $171 million

Another Southern deal that upsized came from the Commonwealth of Virginia. The state priced $171.27 million in general obligation bonds, said a pricing sheet.

The sale included $21.72 million in series 2010A-1 tax-exempt bonds and $149.55 million in series 2010A-2 Build America Bonds.

The 2010A-1 bonds are due 2011 to 2015 with 2% to 5% coupons. The 2010A-2 bonds are due 2026 with term bonds due 2030 and 2040. Coupons range from 2.1% to 3.85%. The 2030 bonds have a 4.4% coupon, but were not reoffered. The 2040 bonds have a 4.7% coupon and were also not reoffered.

The bonds were sold competitively. Calls to the issuer for the winning bidder were not returned Wednesday.

Proceeds will be used to fund capital projects at Virginia higher education facilities.

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