Municipals round out active primary session mixed; Partners Health offers up two bond deals

By Sheri Kasprzak

New York, Dec. 13 - Municipal yields were mixed on Tuesday during a fairly active session for new issues, market insiders said. There was substantial buying activity in the secondary, but the market suffered some weakness early in the day that it just couldn't shake.

Short bonds were off 1 basis point to 2 bps, said a trader reached during the day. Thirty-year bonds, however, were firmer by more than 3 bps, and 20-year bonds were seen lower by more than a basis point.

The day's pricing activity was led by two offerings from Partners Health Care System Inc.

The corporation sold $250 million of taxable bonds on its own and $331.32 million of series 2012L revenue bonds (Aa2/AA/AA) through the Massachusetts Development Finance Agency.

The taxable bonds are due July 1, 2021 and bear interest at 3.443% annually, priced at par, said Debra Sloan, the health care system's deputy treasurer.

J.P. Morgan Securities LLC and Barclays Capital Inc. were the lead managers.

Proceeds will be used for general corporate purposes.

Agency sells tax-exempts

The agency sold the 2012L bonds through senior manager J.P. Morgan Securities.

The bonds are due 2014 to 2026 with term bonds due in 2031, 2036 and 2041. The serial coupons range from 2% to 5%. The 2031 bonds have a split maturity with a 4.25% coupon priced at par and a 5% coupon priced at 106.209. The 2036 bonds have a 5% coupon priced at 103.671. The 2041 bonds have a 5% coupon priced at 103.203.

Proceeds will be used to construct a 379,000 square-foot hospital in Charlestown, Mass., to house a 132-bed replacement for the Spaulding Rehabilitation Hospital, to install a system-wide revenue management system and acute care documentation management system, to construct a 360,000 square-foot building at the Brigham & Women's Hospital's main campus in Boston to house research and clinical space for the hospital's neuroscience and musculoskeletal programs, to build a 400-space parking garage beneath Brigham's Boston campus, to acquire a building in Boston to house research and administrative offices and to renovate and equip various other facilities operated by Partners.

Corporation name recognition

Sloan noted that the corporation could have issued its taxable debt through the agency, as it did with its tax-exempt bonds, but chose to access the market on its own, given its name recognition.

Kelsey Abruzzese, spokeswoman for the agency, said that many issuers choose not to sell taxable debt through the agency because of the fees involved.

Empire State brings debt

Elsewhere during the session, the Empire State Development Corp. offered $702,885,000 of series 2011 state personal income tax revenue bonds, said a pricing sheet.

The sale included $545,485,000 of series 2011A tax-exempt bonds and $157.4 million of series 2011B taxable bonds.

Bank of America Merrill Lynch won the bid for both the tax-exempt and taxable bonds.

The 2011A bonds are due 2012 to 2036 with a term bond due in 2041. The serial coupons range from 3% to 5%. The 2041 bonds have a 4% coupon priced at 98.5. The series 2011B bonds are due 2012 to 2021 with 0.25% to 2.79% coupons, all priced at par.

Peter Heilbrunn, senior debt manager for the corporation, said that the corporation is not specifically required to sell its debt competitively, but chooses to do so.

Among the projects being funded with the bond proceeds are agricultural and market, correctional and court facilities, the Empire Opportunity Fund, housing, the Luther Forest Technology Campus infrastructure, military and naval, New York State Department of Environmental Protection, Restore New York, state police, State University of New York and other projects, as well as equipment purchases, said Heilbrunn.

The corporation last priced state personal income tax revenue bonds in December of 2011. The corporation offered up $367.295 million of the PITs, which are due from 2011 and 2015 to 2020. The 2011 bonds have a 2% coupon priced at 100.47. The other coupons range from 2% to 5%. The 2020 bonds have a split maturity with a 3.5% coupon priced at 102.692, a 4% coupon priced at 106.617 and a 5% coupon priced at 114.593.

North Carolina gears up

Looking ahead, the State of North Carolina is poised to price $156 million of series 2011 grant anticipation revenue vehicle bonds on Thursday, said Julia Vail, spokeswoman for the state treasurer's office.

"The structure of the bonds is interest-only for the first seven years with the principal amortizing over the final five years of the life of the bonds," Vail said.

The Garvees (Aa2/AA/AA-) will be sold through senior manager Bank of America Merrill Lynch.

The bonds are due March 1, 2023.

Proceeds will fund federal aid highway projects.

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