Market conditions may not be so bad after all, Ohio treasurer says; California DWR prices $632.89 million

By Cristal Cody and Sheri Kasprzak

New York, April 24 - Although market conditions have caused some issuers to put off their offerings, one issuer said Thursday that market conditions were good for its sale.

The State of Ohio sold $144.764 million in series L general obligation highway capital improvement bonds this week.

"We found the market conditions to be great," said Richard Cordray, Ohio's treasurer, in an interview Thursday.

"By contrast, we had the very same issuance, the very same type of bonds last year, when we sold $180 million and the all-in cost was 3.87%. This week, we issued $140 million with a 3.39% all-in cost.

"We are very pleased with the results. Part of that is we continue to make a strong retail effort. We thought we made a strong effort when we sold $74 million out of $180 million retail last spring, but this week, we sold $104.9 million out of $140 million retail."

The state sold the bonds (Aa1/AAA/AA+) on a negotiated basis with Merrill Lynch as the lead manager. Cordray said the decision to sell them this way was because of the state's focus on retail investors.

"We felt with the desire to retail the bonds that a negotiated transaction made sense with us," he noted. "We have done some competitive sales before.

"The total cost for us is coming in very favorable. It also gives us an ability to prioritize Ohio investors first."

The offering, which priced Wednesday, included $56.59 million in series L-1 bonds due from 2009 to 2018; $57.915 million in series L-2 bonds due from 2009 to 2018; and $25.495 million in series L-3 bonds due from 2014 to 2016. The L-1 bonds have coupons from 3% to 3.75% with yields from 1.65% to 3.71%, the L-2 bonds have coupons from 4% to 5% with yields from 1.65% to 3.71% and the L-3 bonds have 5% coupons with 3.17% to 3.47% yields.

The proceeds from the sale, which is expected to settle May 1, will be used for highway capital improvement projects.

California DWR sells $632.89 million

Heading up Thursday's pricing action, the California Department of Water Resources priced $632.89 million in Central Valley Project water system revenue bonds with a 4.384% true interest cost, the issuer said Thursday.

The series AE bonds (Aa2/AAA/) priced with 3% to 5% coupons to yield 1.7% to 4.55%, said Tom Dresslar, spokesman for California Treasurer Bill Lockyer.

The bonds have serial maturities from Dec. 1, 2008 through Dec. 1, 2029.

Goldman, Sachs & Co. is the senior manager of the negotiated sale.

Proceeds will be used to refund the department's series 1997S, series 1998U and series 2004AB outstanding revenue bonds, retire outstanding series 1 water revenue commercial paper notes and refund the series 2007A bond anticipation bonds.

Chicago's Board of Education was expected to price $481.85 million unlimited tax general obligation refunding bonds on Thursday.

The series 2008C bonds (A1/AA-/A+) have serial maturities from 2009 through 2033.

Lehman Brothers is the senior manager of the negotiated sale.

Proceeds will be used to refund the board's outstanding series 2003B1, B2 and B3 general obligation bonds and series 2004B1, B2, B3 and B4 general obligation refunding bonds.

The California Infrastructure and Economic Development Bank was underway in orders for the pricing Thursday of $61.915 million lease revenue bonds, a source with the state told Prospect News.

"We take all the orders first, and if it's oversubscribed, it affects the yield and interest rate," the source said.

The series 2008 Oakland Unified School District state school fund apportionment lease revenue bonds (A3/A/A-) have serial maturities from Aug. 15, 2008 through Aug. 15, 2023.

Banc of America Securities LLC is the senior manager of the negotiated sale.

Proceeds will be used to refund the Oakland Unified School District series 2005C lease revenue bonds.

Passaic County prices bonds

Also in pricing news, the County of Passaic in New Jersey priced $59.64 million in bonds Thursday, a source close to the sale told Prospect News.

The bonds priced with a true interest cost of 4.394707% with Merrill Lynch winning the competitive bid. The issuer said there were five bidders for the sale and this indicated strong interest in the offering.

"It's pretty good," she said. "Normally, you'll see two or three. Five is a pretty good result for us, so we're pleased with it."

The coupons on the bonds (A3//), which are due in a serial structure from 2009 to 2028, range from 4% to 5%. The yields were not immediately available.

The sale included $48.625 million in general obligation bonds, $2.938 million in county vocational school bonds and $8.077 million in county college bonds.

Proceeds from the deal will be used for general capital improvements, capital improvements to the county's vocational schools and improvements to county colleges.

In other news, Sutter Health priced $329.15 million in series 2008A revenue bonds through the California Health Facilities Financing Authority, Joe DeAnda, spokesman for the California State Treasurer's Office, confirmed Thursday.

DeAnda said the pricing terms were not immediately available, however.

The bonds (Aa3/AA-/) were sold on a negotiated basis with Morgan Stanley as the lead manager.

The proceeds will be used to repay a line of credit.

Valley View bonds to price

Moving to upcoming bond offerings, Valley View Hospital in Colorado expects to price $51.11 million hospital revenue refunding bonds on May 6, a source said Thursday.

The series 2008 term bonds (/BBB/) are due May 15, 2028 and May 15, 2036.

The bonds will price through the Colorado Health Facilities Authority.

UBS Investment Bank is the senior manager of the negotiated sale.

Proceeds will be used to refund the outstanding $25 million series 2003B revenue bonds and the $20 million series 2006B revenue bonds.

John Muir Health plans to price $146 million variable-rate health care revenue bonds in May, according to a release from Moody's Investors Service.

The $50.6 million series 2008A bonds and $50.7 million series 2008B bonds (A1//) will price on May 1, Moody's reported.

A further $44.6 million bonds will price on May 12.

The bonds will price through the California Statewide Communities Development Authority.

Proceeds will be used to refund the $44 million in series 1997B bonds and the $100 million in series 2006B and C bonds.

Calls for additional information were not returned before press time.

Dow to sell $75 million

Dow Chemical Co. intends to price $75 million environmental facilities revenue bonds through Brazos Harbor Industrial Development Corp. in Texas, according to a preliminary official statement.

The series 2008 bonds are due May 1, 2038.

The bonds initially will price with a term rate beginning May 6, 2008 and ending April 30, 2028.

Goldman, Sachs & Co. is the underwriter.

Proceeds will be used to pay equipment acquisition and construction costs at Dow Chemical's industrial sewage and solid waste disposal facilities in Brazoria County, Texas.

Additional information was not immediately available.

Illinois to price $57.625 million

The Illinois Housing Development Authority intends to price $57.625 million variable-rate housing bonds on April 29, a source said.

The sale includes $14.17 million series 2008A bonds for Larkin Village, $37.885 million series 2008B bonds for Lakeshore Plaza and $5.57 million series 2008C bonds for the Florida House.

The bonds will price initially with a weekly interest mode.

The series 2008A bonds are due Jan. 1, 2027. The series 2008B bonds are due July 1, 2027 and the series 2008C bonds are due July 1, 2041.

JPMorgan is the senior manager of the negotiated sale.

Proceeds will be used to refinance outstanding series 1997 revenue bonds, series 2000A revenue bonds and series 2006C variable rate bonds.

Quincy Medical Center expects to price $61.95 million revenue bonds through the Massachusetts Health and Educational Facilities Authority in May, the issuer said Thursday.

"They're shooting for mid-May," said Liam Sullivan, spokesman for the authority. "There's not an ironclad date that's been scheduled."

No ratings will be requested for the series 2008A bonds, which have term maturities due in 2018, 2028 and 2038.

Oppenheimer & Co. will manage the negotiated sale.

Proceeds will be used to refund the center's series 1993 bonds and finance and refinance capital improvement projects for renovations and equipment upgrades, including new operating room equipment and a computerized physician order entry system.

Issuers make bids on auction-rate bonds

Moving to auction-rate news, Thursday the Louisiana Stadium and Exposition District announced plans to bid on $84.675 million in series 2006 tax-exempt revenue and refunding bonds, a notice said Thursday.

The district intends to bid the higher of 2.9% or the prevailing Securities Industry and Financial Markets Association Municipal Swap Index.

The next auction will be held April 29.

In the most recent auction, held April 22, the clearing rate was 10% with an 11.75% high bid. The low bid was 6%. Seventeen bids were made in the last auction.

Also, American University in the District of Columbia plans to bid on $50 million in series 2006A multimodal revenue bonds, a notice said Thursday.

The university will bid with a 2.45% interest rate on $15.05 million of the bonds on April 28, the notice said. The university plans to put hold orders on the remaining $34.95 million in bonds.

The bonds are due Oct. 1, 2036.

The Saint Elizabeth Medical Center intends to bid in the May 6 auction for the remainder of the $113.875 million revenue refunding and improvement bonds, according to a notice.

The medical center plans to submit bids based on the Sifma Municipal Swap Index plus a spread of 5 bps.

The series 2003A, 2003B and 2003C auction-rate bonds were sold through the Kentucky Economic Development Finance Authority.

The hospital already owns $76.1 million of the bonds after bidding in an auction held Tuesday.

Elsewhere, the Oglethorpe Power Corp. in Tucker, Ga., converted the interest rate mode on $181.89 million bonds from an auction rate to a term rate on Thursday, according to a filing with the U.S. Securities and Exchange Commission.

The converted series 2007 pollution control revenue bonds bear 4.75% interest until a mandatory tender on March 31, 2011.

The bonds were sold through the Development Authority of Appling County, the Development Authority of Burke County and the Development Authority of Monroe County.

The bonds, insured by MBIA Insurance Corp., have bullet maturities in 2038, 2039 and 2040.

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