Maryland DOT brings $110 million transportation bonds at 3.38%; Citizens' $2 billion sale ahead

By Aaron Hochman-Zimmerman and Sheri Kasprzak

New York, April 29 - Municipals saw some weakness Wednesday after Treasuries took a hit as well.

Meanwhile, the primary market is gearing up for the sale of the week - a $2 billion offering of series 2009 senior secured bonds from the Citizens Property Insurance Corp. of Jacksonville, Fla.

Despite the slight drop and a full serving of negative external headlines, including those related to the swine flu outbreak, insiders suggested that the market was still performing fairly well.

"We're all not really worried about the flu," a trader said.

Elsewhere, a sellside source said he felt that dealers are unloading inventory to prepare for big volume down the road.

"There's a distinct feeling that dealers, as a group, may look to start unloading that inventory in order to make space for big new issuance volumes coming down the pike," the sellsider said.

"The ratio of offers to bids wanted in the muni market is holding around 20 times in recent days, up from about 18 times two months ago, which is a sign of heavy dealer inventories. Some part of this greater offer/bid wanted ratio is likely the result of dealers owning a portion of last week's BAB deals, but we nonetheless anticipate better dealer selling in the coming weeks ahead of the traditionally heavy June issuance month."

Coming up in Thursday's heavy day of issuance is the previously mentioned Citizens Property sale. The deals will be brought by Goldman, Sachs & Co.

The 2009A-1 bonds are due 2016, and the 2009A-2 bonds are due 2010.

Proceeds will be used to make deposits to reserve accounts.

Some market sources have indicated that the bonds may be priced cheaply because of the high-risk nature of the insurance company, especially ahead of the coming hurricane season in Florida.

MDOT's $110 million

In Wednesday's primary action, the Maryland Department of Transportation priced $110 million in series 2009 consolidated transportation bonds (Aa2/AAA/AA) at a true interest cost of 3.377%, according to chief financial officer David Fleming.

The department was pleased with the results of the auction, Fleming said.

Before the pricing, "the market had been rather calm in the morning," he said, which was encouraging.

It was difficult to determine how successful the auction was relative to the market, said debt manager June Hornick.

"In this market it's really hard to say," she said, but added that the results were "a tad better" than expectations.

The department's recent rating affirmations from each of the major agencies were positive developments, Fleming said.

"We were very pleased [considering] the whole economic situation," he said.

Barclays Capital Inc. placed the highest bid of seven interested banks. Public Financial Management Inc. acted as financial adviser for the competitive deal.

The bonds carry serial maturities from 2012 to 2024.

Proceeds from the sale will be used to fund the department's highway, transit, port and aviation projects.

The Maryland Department of Transportation is located in Hanover, Md.

Cary sells G.O.s

Elsewhere, the Town of Cary in North Carolina brought $53 million in series 2009 general obligation public improvement bonds on Wednesday, said a source who had seen the details.

The full details of the offering were not immediately available, but the bonds are due 2012 to 2029 with coupons from 3% to 5% and yields from 1.24% to 4.29%.

The bonds were sold on a competitive basis with Davenport & Co. LLC as the financial adviser.

The bonds were part of a $96.21 million sale. The details on the $43.21 million offering of series 2009B G.O. public improvement refunding bonds were not immediately available.

Karen Mills, the town's director of finance, said the full terms will be made available Thursday.

Proceeds will be used to construct, acquire and equip street improvements and refund the town's series 1996, 1998 and 2001 bonds.

IDA of Maricopa sale

Along with the Citizens Property deal, Thursday's heavy sales volume will include a $590.6 million offering of series 2009 variable-rate bonds from the Industrial Development Authority of the County of Maricopa in Arizona. The offering will be sold for the Catholic Health Facilities Financing Authority for the benefit of Catholic Healthcare West.

J.P. Morgan Securities Inc. and Citigroup Global Markets Inc. are the lead managers.

Proceeds will be used to fund expenses at Catholic Healthcare West and refund current interest bonds.

Catholic Healthcare West has its headquarters in San Francisco.

Providence sale ahead

Also coming up, the Providence Health & Services Obligated Group is expected to price $250 million in series 2009A direct obligation notes, said a preliminary official statement.

Merrill Lynch & Co. Inc. is the lead manager for the bonds.

The maturities for the offering have not yet been set.

Proceeds will be used for general corporate purposes.

Based in Seattle, Providence provides services in Washington, Montana, Oregon and California.

California water district

Looking to later in May, the Western Municipal Water District in Riverside, Calif., is set to sell $103 million in series 2009 water revenue and water revenue refunding bonds (//AA+/F1+) according to a preliminary official statement.

The sale includes $48 million in series 2009A adjustable-rate water revenue refunding bonds and $55 million in series 2009B water revenue bonds.

The offering is set to price the week of May 11, said a sellside source familiar with the offering.

Merrill Lynch is the senior manager for the negotiated deal.

The series 2009A bonds are due Oct. 1, 2032, and the 2009B bonds are due 2009 to 2029 with term bonds due 2034 and 2039.

Proceeds will be used to refund the district's outstanding refunding bond anticipation notes as well as finance the acquisition and construction of wastewater and water facilities.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.