Window seen closing for investors who want to buy auction-rate bonds; issuers continue to bid

By Cristal Cody and Sheri Kasprzak

New York, April 14 - Two weeks ago, opportunistic investors were buying up failing auction-rate bonds in an effort to grab high yields. Now the window seems to be closing for these investors as yields drop.

"The timing is really over," said one market source whose firm has bought up failed or troubled auction-rate securities.

"Two or three weeks ago was the really good time to get in. You could buy up some of these and get a really amazing yield. That's pretty much over at this point. You might find a few here and there that are worth buying up."

As these investors seek more lucrative investments, issuers continued to announce plans to bid on their own auction-rate securities on Monday, led by the Memorial Sloan-Kettering Cancer Center of New York, which plans to bid on $135 million hospital revenue bonds in the upcoming auctions on Thursday, according to a notice.

The center intends to submit bids for $38.325 million series 2002A1 1-5; $47.9 million series 2002 A1 1-2; $21.675 million series 2002A2 1-5; and $27.1 million series 2002A2 1-2 revenue bonds.

The bonds had high and low bids of 1.8% in the auctions held April 10.

Goldman, Sachs & Co. is the broker-dealer.

Citizens Property Insurance Corp. plans to bid on $175 million bonds in Wednesday's auction, according to a notice.

The Jacksonville, Fla.-based company plans to bid at least a 3.72% interest rate for the entire principal available of its series 2006A15 high risk account senior secured bonds.

The bonds had a low bid of 6% and a high bid of 10% in the March 19 auction.

North Georgia Health bid planned

In other bid news, the Northeast Georgia Health System said it will bid on $52.525 million in series 2005A Hospital Authority of Hall County and the City of Gainesville revenue anticipation certificates, according to a bid notice released Monday.

The issuer plans to make a bid in the April 16 auction at a designated rate of 4.1%, the notice said.

"The borrower will continue to submit bids in the auctions to purchase all of the bonds offered in each auction at the designated rate until such time as the borrower beneficially owns all of the bonds," the notice said.

Illinois $1.2 billion G.O. certificates

Looking ahead, the state of Illinois expects to price $1.2 billion general obligation certificates in a competitive sale on Thursday, according to a sale notice from the governor's office.

The series April 2008 certificates are due May 23, 2008 and June 17, 2008.

D.A. Davison and Co. is the state's financial advisor.

Proceeds will be used to provide mid-fiscal year liquidity to the state's general fund and hospital provider fund for inpatient and outpatient payments to hospitals in the state.

Meanwhile Tuesday is gearing up to be a rather active day for pricings, led by a $203.8 million sale of series 2008A general obligation refunding bonds from Philadelphia. The bonds (Baa1//) will be used to refund the city's series 2003B auction-rate bonds. The bonds will be sold on a negotiated basis through lead manager Lehman Brothers.

Also set to price Tuesday is $200 million in refunding revenue anticipation certificates and bonds (Aa2/AA/) from the Children's Healthcare of Atlanta/Dekalb Private Hospital Authority. The bonds will be used to refund the hospital's series 2005A and 2005B revenue anticipation certificates and series 2005B revenue bonds. Citigroup Global Markets is the lead manager for the negotiated deal.

Elsewhere, Pima County, Ariz. plans to sell $75 million in series 2008 sewer revenue bonds (A1//) on a competitive basis. Those proceeds will be used for sewer system improvements, including pipe rehabilitation and treatment plant expansion.

Roseville prices at 1.35%

Moving to Monday's light pricing activity, Roseville, Calif., and the South Placer Wastewater Authority priced $165.354 million variable rate demand refunding wastewater revenue bonds with a 1.35% initial interest rate, a city official said Monday.

The city also expects to refund $150 million auction rate electric bonds in mid-May, said Monty Hanks, the city's investment analyst.

The wastewater bonds (Aa1/AA/) priced Wednesday with a weekly interest rate, he said.

The $72.504 million series 2008A bonds are due Nov. 1, 2035 and the $92.85 million series 2008B bonds are due Nov. 1, 2027.

Morgan Stanley & Co. managed the negotiated sale.

Proceeds will be used to refund series 2003 auction-rate bonds and series 2000A and 2000B revenue bonds.

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