Dallas County Hospital District brings $705 million; Treasury market boosts muni secondary

By Sheri Kasprzak

New York, Aug. 26 - A major offering out of the Lone Star State led Wednesday's municipal action, and the secondary market finally found some firmness after struggling through a week of lethargy. The market was, in part, boosted by some gains in the Treasury market, said market insiders.

In primary action, the Dallas County Hospital District came to market with $705 million in series 2009 limited tax and Build America Bonds to upgrade 50-year-old clinic facilities, said the district's chief financial officer, John Dragovitz.

"We've worked for a number of years to develop a project to replace our existing campus," Dragovitz said in an interview.

"The existing Parkland [Health and Hospital System] clinics were built in the mid-50s, and we're at the point where it would be economically advantageous to renovate or reuse existing facilities."

The new facilities will be funded with the bonds as well as existing cash and philanthropic donations.

Dragovitz said the district began the process to obtain financing for the new facilities two years ago, a process that culminated in the approval of a $752 million bond referendum. He said the remaining $47 million may be issued in the future in the form of revenue bonds to equip and furnish the new facilities.

"Voters approved that over 82%," Dragovitz noted. "It was approved in all precincts. It was a pretty astounding mandate and is indicative of the reputation the clinics have in our community."

The district has been sitting on the bond offering since it was approved in November 2008 because market conditions were less than stellar, Dragovitz said.

"We've been sitting and waiting for the markets to defrost," he said.

TIC comes at 3.71%

The bonds received an all-in true interest cost of 3.71%. The introduction of Build America Bonds since the bonds were approved helped the district achieve a reasonable rate, he added.

"We had a lot of market luck," he said.

The sale included $26.1 million in series 2009A limited-tax bonds, $185.035 million in series 2009B Build America Bonds and $493.865 million in series 2009C Build America Bonds.

The series 2009A bonds are due 2014 to 2016 with coupons from 3% to 5%.

The series 2009B bonds are due 2020 to 2025 with a term bond due 2034. The serials have coupons from 4.948% to 5.648%, all priced at par. The 2034 bonds have a 6.171% coupon, also priced at par.

The 2009C bonds are due 2017 to 2026 with term bonds due 2029 and 2044. The serials have coupons from 4.148% to 5.298%. The 2029 bonds have a 5.421% coupon, priced at par, and the 2044 bonds have a 5.621% coupon, also priced at par.

Merrill Lynch & Co. Inc. was the senior manager.

Treasuries boost munis

Moving to the secondary market, traders said municipals got a boost from some improvements in the Treasury market.

"We seem to be moving in line with Treasuries," said a trader reached in the afternoon.

"Munis are looking better by maybe a few basis points, especially out long. It's not a huge improvement, but we're gaining some ground this week."

Another trader agreed.

"Not a lot is trading," she noted.

"It's still a pretty quiet market right now. I think there's still a lot going on over in primary. But Treasuries are looking better, so we're benefiting from those gains."

Among the light trading volume, the Commonwealth of Pennsylvania's second refunding bonds were trading. The 5% 2018 bonds were seen at 2.96% after pricing Tuesday at 3%. The 5% 2019s were seen at 3.17% after pricing at 3.21%.

Elsewhere, the Peralta Community College District of California saw its series 2006C general obligation utility bonds moving. The 5% 2039 bonds were seen trading at 5.14%, unmoved from pricing on Tuesday.

Dasny sells two for North Shore

In other primary market activity from Wednesday, the Dormitory Authority of the State of New York priced two bonds totaling $282.405 million.

The authority sold $224.395 million in series 2009A revenue bonds for the North Shore-Long Island Jewish Obligated Group, said a pricing sheet.

The bonds (Baa1/A-/A-) were sold through senior managers Citigroup Global Markets Inc. and Morgan Stanley & Co. Inc.

The bonds are due 2013 to 2021 with term bonds due 2025, 2030, 2030, 2037 and 2037. Coupons range from 4% to 5.75%.

Proceeds will be used to construct a new patient tower at Long Island Jewish Medical Center as well as make improvements at the North Shore University Hospital.

The authority also priced $58.01 million in series 2009E revenue bonds for the North Shore-Long Island Jewish Obligated Group, said a pricing sheet.

The bonds (Baa1/A-/A-) were also sold through lead managers Citigroup and Morgan Stanley.

The bonds are due 2019 to 2023 with a term bond due 2033. The coupons range from 5% to 5.5%.

Proceeds will be used to finance the cancellation of the obligated group's series 2007B bonds and to fund the termination of a swap agreement.

Miami-Dade brings $136.32 million

Also sold on Wednesday were $136.32 million in series 2009 capital asset acquisition special obligation bonds from Miami-Dade County of Florida, according to a pricing sheet.

The bonds (A1/A+/) were sold through lead manager Raymond James & Associates Inc.

The bonds are due 2010 to 2027 with term bonds due 2029, 2034 and 2039. The serial coupons range from 3% to 5%. The 2029 bonds have a 5% coupon, priced at 99.379; the 2034 bonds have a 5.125% coupon, priced at 99.649; and the 2039 bonds have a 5.125% coupon, priced at 98.869.

Proceeds will be used to construct, acquire and develop capital projects in the county and to make a deposit to a debt service reserve fund.

Utah State Building bonds price

Elsewhere, the Utah State Building Ownership Authority priced $126.755 million in series 2009 lease revenue bonds (Aa2/AA+/) Wednesday, said a pricing sheet.

The bonds were sold through Barclays Capital Inc.

The deal included $8.445 million in series 2009B bonds, $16.715 million in series 2009C bonds, $12.125 million in series 2009D bonds and $89.47 million in series 2009E bonds.

The 2009B bonds are due 2012 to 2019 and have coupons from 3% to 5%.

The 2009C bonds are due 2024 and 2029 with 5.294% and 5.768% coupons, respectively, both priced at par.

The 2009D bonds are due 2014 to 2017 with 5% coupons across the board.

The 2009E bonds are due 2020 to 2024 with term bonds due 2018 and 2030. The serials have 5.054% to 5.544% coupons, all priced at par. The 2018 bonds have a 4.624% coupon, priced at par, and the 2030 bonds have a 5.768% coupon, priced at par.

Proceeds will be used to acquire real estate as well as construct, acquire and improve existing facilities.

Mobile authority sells bonds

In other action, the Public Educational Building Authority of the City of Mobile in Alabama sold $99.06 million in series 2009A limited obligation school bonds, said a pricing sheet.

The bonds (/AAA/A-1+/) were sold through Gardnyr Michael Capital Inc. Wednesday.

The bonds are due 2012 to 2025 with term bonds due 2029 and 2033. The coupons range from 2% to 5%.

Proceeds will be used to retire the authority's series 2003 school warrants and to pay for a swap termination agreement.

Waterbury plans $313.19 million sale

Moving to upcoming offerings, the City of Waterbury in Connecticut is set to sell $313.19 million in series 2009 taxable G.O. pension bonds, said a preliminary official statement.

The bonds will be sold on a negotiated basis with William Blair & Co. as the senior manager.

The bonds are due 2010 to 2019.

Proceeds will be used to make a deposit to the city's pension plan.

Also ahead, the City and County of San Francisco Public Utilities Commission is gearing up to price $375 million in series 2009B San Francisco water revenue bonds on Tuesday, said a preliminary official statement.

The bonds (A1/AA-/) will be sold on a competitive basis with Montague DeRose & Associates LLC and Kitahata & Co. as the financial advisers.

The maturities have not yet been set.

Proceeds will be used to finance a portion of the construction, acquisition, equipment and design of various capital improvements included in the commission's water system improvement program.

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