Market digests big week; Riverside prices $240.91 million; Metropolitan Washington active

By Aaron Hochman-Zimmerman and Cristal Cody

New York, Aug. 6 - Riverside, Calif., priced $240.91 million, but the municipal market was a noticeably calmer place on Thursday than during the previous two sessions.

Tuesday and Wednesday were packed with major new issues from New Jersey, Maryland and the Metropolitan Washington Airports Authority among others.

By Thursday the focus shifted more toward trading and absorption as Metro Washington traded feverishly.

The 2009B bonds due 2015 were seen trading at 4.5%, and the bonds due 2018 were quoted at 5.35%.

On the longer end, the bonds due 2033 were seen at 7.05%.

"There was a lot of business this week," a syndicate official said.

"It's been good ... everybody got their deals done," the official said.

Investors were able to play across a wide swath of the yield curve including some "yieldier paper" from Metro Washington, and it was "really nice to have the zeros as well," the syndicate source said about Maryland's competitive bonds.

Washington Airports fly

Metropolitan Washington Airports Authority priced approximately $963 million in series 2009A-D first and second senior lien bonds Tuesday and Wednesday at a true interest cost of 6.026%, according to deputy chief financial officer Andy Roundtree.

The series 2009A first senior lien bonds (A2/A/) priced at $198 million after being upsized from $173 million. The term bonds due 2032, 2039 and 2044 priced with yields at 5.18%, 5.25% and 5.375%.

The series 2009B second senior lien bonds (Baa1/BBB+) priced at $207 million after being upsized from $111.539 million. The serial bonds due from 2011 to 2040 carry yields ranging from 3.5% to 7.9%.

The series 2009C convertible capital appreciation bonds (Baa1/BBB+) priced at $158.234 million after being downsized from $182 million. The bonds mature in 2041.

Roundtree indicated that the downsizing of the capital appreciation bonds was more accurately described as sliding money toward the greater interest in the other products.

The series 2009D Build America Bonds (Baa1/BBB+) were priced at $400 million after being upsized from $359.53 million. The bonds due 2046 carry a yield of 7.462% which translates to 4.85% after the federal subsidy.

"We were very pleased with that particular product," Roundtree said.

The retail period, which began on Tuesday, and the institutional period on Wednesday were managed by Citigroup Global Markets Inc. and Morgan Stanley & Co. Inc., which acted as co-leads. Barclays Capital Inc., BB&T Capital Markets Inc., Davenport & Co. LLC, Estrada Hinojosa & Co. Inc., J.P. Morgan Securities Inc., Loop Capital Markets LLC, Merrill Lynch & Co. Inc., Mesirow Financial, Morgan Keegan & Co. Inc., Rice Financial Products Co., Siebert Brandford Shank & Co. LLC and Wachovia Bank, NA were co-managers.

Proceeds will be used for improvements to the Dulles Toll Road.

The Metropolitan Washington Airports Authority is located in Washington, D.C.

Down by the Riverside

Riverside, Calif., priced $240.91 million series 2009 sewer revenue bonds at a 4.516875% TIC, according to Brent Mason, assistant financial director.

The all-in TIC was 4.53% and "we are very pleased with that," Mason said.

"Though we are not that close to the market, we're being told that for equivalent credits, our pricing was better than others in the market," he said.

Still, Mason said that what he has heard may be "just hype," although "we've typically gotten strong responses to the city's debt offerings, and that was true again [Thursday]."

Wells Fargo Brokerage Services LLC acted as lead underwriter for the negotiated bonds.

The bonds carry serial maturities from 2012 to 2019 and term maturities from 2020 to 2039. Bonds due 2017 to 2039 are Build America Bonds.

Proceeds will be used to fund improvements to the city's sewer system.

After Thursday's success, Riverside plans to return to the market, Mason said.

"This is a first offering of at least two that will be needed to address a nearly $600 million capital plan of the Regional Water Quality Control Plant," he said.

Mason said he has received a lot of questions from investors about the effects of the California state budget on the city's credit.

"I believe the Cal budget situation has affected Riverside and every municipality, but [we] have no way to quantify that," he said.

Florida sells $147 million refunding bonds

Elsewhere, the State of Florida was pleased with the $147 million it priced in refunding bonds for the State Board of Education on Thursday with a 3.16% TIC, the Florida Division of Bond Finance told Prospect News.

The series 2009A full faith and credit public education capital outlay bonds (Aa1/AAA/AA+) were sold with 2.5% to 5% coupons to yield 0.49% to 3.84% from 2010 through 2022, said Carol Bagley, bond development supervisor for the state.

"We thought we got a good sale this time," she said. "We were able to take advantage of the short end of the yield curve. The tone of the market had firmed up, and the muni market has been staying rather stable."

Morgan Stanley & Co. Inc. was the winner out of six bidders in the competitive sale, she said.

The proceeds will be used to refund a portion of the outstanding series 1998C public educational capital outlay refunding bonds.

Fulton County hawks bonds

Farther up I-95, Fulton County Facilities Corp. in Georgia announced the pricing of $110.885 million series 2009 refunding certificates of participation (A1/AA-/AA-) at a 3.613% TIC on Wednesday, according to Bryce Holcomb, director of public finance for Citigroup Global Markets Inc. in Atlanta.

Compared to many of the other deals in the market, "we did very well," Holcomb said.

The bonds carry non-callable serial maturities from 2011 to 2019.

Citigroup Global Markets acted as lead underwriter for the negotiated deal.

Proceeds will be used to refund the corporation's series 1999 bonds.

Fulton County Facilities is located in Atlanta.

Lexington schools prices

Northbound again, Lexington School District No. 1 in South Carolina announced that it will sell $90 million series 2009A bonds as either general obligation bonds or general obligation Build America Bonds, according to a preliminary offering statement.

The bonds will be sold competitively, and the best structure of the district will be chosen at the time of pricing. Wells Fargo Brokerage Services will act as financial adviser.

Proceeds will be used to make capital improvements to school facilities.

Lexington School District No. 1 is located in Lexington, S.C.

Bonds Rock U

The Dormitory Authority of the State of New York priced a $100 million series 2009C revenue bond (Aa1/AAA/) with a coupon of 5% to yield 4.8%, according to an offering statement.

The term bond due July 1, 2040 priced on Tuesday on behalf of Rockefeller University.

JPMorgan and Morgan Stanley acted as lead underwriters for the negotiated deal. Ramirez & Co. Inc., Southwest Securities Inc. and Stone & Youngberg LLC were co-managers.

Proceeds will be used to pay for the renovation and modernization of some buildings on the university's campus in New York.

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