Competitive sales pick up; New Mexico leads Wednesday pricings with $169.55 million sale of bonds

By Cristal Cody and Sheri Kasprzak

New York, May 21 - As market conditions continue to improve, market insiders said Wednesday that more and more issuers are giving competitive sales a second look.

A few weeks ago, market sources said negotiated was the way to go, but with improved market conditions, competitive sales may be best for some issuers.

"They're not for everyone, of course, but some of them can get good deals competitively," a sellside source said.

"We're still seeing more going negotiated, but there are some cases where that's just the best route to take. I'd definitely say there are more [competitive sales] than a few weeks ago."

One issuer on Wednesday agreed with the assessment that the market conditions were good for its competitive sale.

New Mexico priced $169.55 million in severance tax and refunding bonds with 3.57% and 2.73% true interest costs, according to David Paul, president of Fiscal Strategies Group, the state's financial adviser.

"The market was good. These are very strong bids," he said.

The $149 million series 2008A1 severance tax bonds (Aa2/AA/) priced on Tuesday with a 3.568% true interest cost and 4% to 5% coupons to yield 1.92% in 2009 to 3.86% in 2018, he said.

Lehman Brothers was the winning bidder in the competitive sale.

The $20.55 million series 2008A2 supplemental severance tax refunding bonds (Aa3/AA-/) priced with a 2.729% true interest cost and 3% coupons to yield 2% in 2009 to 2.85% in 2012, Paul said.

Morgan Stanley was the winning bidder.

Proceeds will be used to finance projects and to refund the July 1, 2009 maturity from the series 2003A severance tax bonds and the July 1, 2009 through July 1, 2012 maturities from the series 2002B supplemental severance tax bonds.

Case Western bonds price

Moving elsewhere, Case Western Reserve University in Ohio priced $180.32 million in series 2008 private university revenue bonds, said a source familiar with the sale Wednesday. The pricing information, he said, may not be available until later this week.

The bonds (A1//) were sold on a negotiated basis with Morgan Stanley as the senior manager. The sale included $60 million in series 2008A bonds, $33.75 million in series 2008B-1 bonds, $33.75 million in series 2008B-2 bonds and $52.82 million in series 2008C bonds.

Proceeds will refund the university's series 2004 auction-rate bonds.

In other pricing news from Wednesday, the Tampa Bay Water Authority in Florida was set to price $103.67 million in series 2008 utility system revenue bonds (Aa3/AA+/AA), but calls to the issuer were not returned by press time.

Raymond James was the lead manager for the negotiated deal.

Proceeds will pay for a portion of a project that will increase hydraulic capacity at pump stations and fund a deposit to the reserve account.

CareGroup's bond sale

In other bonds that were expected to price Wednesday, CareGroup Inc. planned to price $538.455 million revenue and refunding bonds on Wednesday after pushing back the pricing date a week.

The series 2008 bonds (A3//) were set to price through the Massachusetts Health & Educational Facilities Authority.

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

Proceeds will be used to provide $150 million of new money for capital projects at the system's four hospitals. The proceeds also will be used to refund the $61.7 million series 1992G2, $4 million series 1996H1, $9.2 million series 1996H2, $3.8 million series 1993F, $35 million series 1998B1, $40 million series 1998B2, $68.575 million series 2004C1, $69.5 million series 2004C2 and $49.05 million series 2004D bonds.

Sisters of Mercy bond sale

The Sisters of Mercy Health System had planned to price $109.675 million variable-rate demand obligation refunding revenue bonds on Wednesday.

The series 2008A, B and C bonds (Aa2/VMIG 1//) were slated to price through the Missouri State Health and Educational Facilities Authority.

The series 2008A and B bonds initially will price with a daily interest rate, and the series 2008C bonds initially will price with a weekly rate.

Bear, Stearns & Co. is the underwriter.

Proceeds will be used to refund the outstanding $108.9 million series 2004A, 2004B and 2004C auction-rate bonds.

Also, the Massachusetts Development Finance Agency expected to price $134.75 million revenue bonds for the WGBH Educational Foundation on Wednesday.

The sale includes $107.25 million series 2008A current interest bonds and $27.5 million series 2008B zero-coupon bonds.

RBC Capital Markets is the senior manager of the negotiated sale.

Proceeds will be used to pay swap termination fees and to refund the foundation's series 2007A, series 2006A, series 2005A and series 2002B variable-rate demand revenue bonds.

Calls to confirm the sales were not returned.

Chicago's $498.34 million bonds

Looking to upcoming offerings, Chicago plans to sell $498.34 million in series 2008 general obligation bonds, a preliminary official statement said.

The bonds will be sold on a negotiated basis with Depfa First Albany and Jackson Securities as the lead managers.

A source at the issuer Wednesday said no pricing date has been set for the sale at this time.

The sale includes $377.26 million in series 2008A G.O. refunding bonds and $121.08 million in series 2008B taxable project and refunding G.O. bonds.

Proceeds will be used for public right-of-way infrastructure improvements, the acquisition of personal property, the cash flow needs of the city, construction of municipal facilities like fire and police stations and refunding existing bonds.

Utah Telecom bond sale

In other upcoming offerings, the Utah Telecommunication Open Infrastructure Agency intends to price $185 million taxable adjustable-rate special revenue and refunding bonds on June 2, according to a source connected with the sale.

"They'll price on the same day [as the closing] or the day before," the source said.

The series 2008 bonds will price initially with a weekly interest rate effective through June 11, 2008.

The bonds are due June 1, 2040.

KeyBanc Capital Markets will manage the negotiated sale.

Proceeds will be used to refund and retire the $82.6 million series 2004 revenue bonds, $30 million series 2006 revenue bonds and $21.354 million series 2007 revenue priority bonds; to finance the installation of fiber optic cable that passes by 11 cities in Utah and to provide working capital for the agency.

Los Angeles' $500 million bond sale

The County of Los Angeles expects to price $500 million tax and revenue anticipation notes in June, a source with the issuer said Wednesday.

The series 2008/2009A fixed-rate notes are due June 30, 2009.

An exact pricing date has not been set, the source said.

"We know we're going to close the transaction on July 1," the source said.

Lehman Brothers is the senior manager of the negotiated sale.

Proceeds will be used to help meet fiscal year 2009-2009 county general fund expenditures. The county issued a resolution on May 13 to sell up to $1 billion in notes.

Massachusetts plans $1.162 billion

The Massachusetts Water Resources Authority plans to price $1.162 billion multi-modal bonds, according to preliminary official statements.

The sale includes $337.96 million series 2008A bonds due Aug. 1, 2037; $124.58 million series 2008B bonds due Aug. 1, 2031; $199.375 million series 2008C bonds due Nov. 1, 2026; $83.6 million series 2008D bonds due Aug. 1, 2011; $224.74 million series 2008E bonds due Aug. 1, 2037; and $191.69 million series 2008F bonds due Aug. 1, 2029.

The subordinated general revenue refunding bonds initially will price with a weekly rate.

Citigroup Global Markets will manage the negotiated sale of the series 2008A bonds.

Lehman Brothers will manage the series 2008B bonds; JPMorgan will manage the series 2008C and 2008D bonds; Morgan Stanley will manage the series 2008E bonds and Goldman, Sachs & Co. will manage the series 2008F bonds.

Proceeds will be used to refund the authority's outstanding subordinated bonds.

Piedmont Power bonds

Piedmont Municipal Power Agency in South Carolina plans to price $227.9 million electric revenue bonds on Thursday, according to a release from Moody's Investors Service.

The $107.9 million series 2008B bonds, $90 million series 2008C bonds and $30 million series 2008D bonds will price initially with a weekly interest rate.

The bonds (Aaa/VMIG 1//) are insured by Assured Guaranty Corp.

Goldman, Sachs & Co. will manage the negotiated sale.

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