Muni yields rise; strong demand for Philadelphia bonds; Catholic Healthcare plans $450 million

By Cristal Cody

Tupelo, Miss., April 8 - Municipal benchmark yields and intermediate terms continue to show a slight increase, a source told Prospect News on Thursday.

"Two weeks ago, the municipal benchmark yields and intermediate terms increased by 25 basis points in some maturities. But this week, we've seen [only] a slight increase," the source said. "The 10-year spots started the week at 311 basis points, and it ended today at 314 basis points."

Also, "the 30-year spot started the week at 417 basis points and ended today at 417 basis points," the source said. "There's gradual changes but not significant changes like we were seeing last week or the week before."

Meanwhile, strong demand was seen in two sales on Thursday from Philadelphia and the Irvine Water Ranch District Joint Power Agency in California, according to sources.

Coming up, new muni offerings also were announced by Catholic Healthcare Partners and the University of Pittsburgh.

Philadelphia prices $395 million

On Thursday, Philadelphia priced $395 million in water and wastewater revenue refunding bonds to strong retail and institutional demand, a source told Prospect News.

The deal was upsized from an original offering of $391.3 million, according to the source.

"That priced for retail yesterday, and they finalized pricing today. It had really good demand from retail and institutional buyers," the source said.

The series 2010 bonds (A3//A-) priced with 2.5% to 5% coupons to yield 1.79% to 4.11%.

The bonds have serial maturities from 2010 through 2019.

Morgan Stanley & Co. Inc. was the senior manager of the negotiated sale.

The proceeds will be used to refund the outstanding series 2003 variable-rate bonds and pay costs associated with terminating a fixed payer swap agreement to Citigroup Inc.

Irvine Ranch Water District sells

Also on Thursday, the Irvine Ranch Water District Joint Power Agency in California priced $436 million in tax-exempt revenue bonds, according to a source.

The deal was increased from a planned offering of $420 million.

"That was one of the largest deals that priced" this week, a source said Thursday.

The series 2010 bonds (Aaa//) priced with coupons and yields of 0.904% to 2.60% on the serial maturities from 2011 though 2014, the source said.

Additional sale information was not immediately available.

The bonds were sold through a negotiated sale managed by senior manager Bank of America Merrill Lynch.

The proceeds will be used to partially refund the agency's taxable refunding bonds.

Catholic Healthcare Partners to sell

Looking ahead, Catholic Healthcare Partners and the County of Allen, Ohio, expect to price $450 million in revenue bonds, according to a preliminary official statement.

The sale includes $110 million in series 2010A and $340 million in series 2010B hospital facilities revenue bonds.

The bonds (A1/AA-/AA-) will price through a negotiated sale led by senior managers J.P. Morgan and Morgan Stanley.

The proceeds will be used to refund outstanding revenue bonds, refinance existing interim debt and finance new hospital projects.

The county seat is Lima, Ohio.

University of Pittsburgh to price

Also on the calendar, the University of Pittsburgh intends to sell $118 million in tax-exempt Panthers notes, according to a preliminary official statement released Thursday.

The sale is structured as Pitt Asset Notes-Tax-Exempt Higher Education Registered Series 2010.

The notes (MIG1/SP-1+/) are due in 2011.

Barclays Capital Inc. will manage the negotiated sale.

The proceeds will be used to finance capital expenditures and refund $78 million of the university's outstanding series 2007 Panthers.

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