New issues slow as market participants head off for vacation; Maine sells $55.845 million BANs

By Cristal Cody and Sheri Kasprzak

New York, Aug. 11 - New offerings activity declined on Monday in the municipals market, with warm weather and an approaching holiday slowing down activity, according to a sellside source.

"The level of activity remains light as a lower volume of new issuance and secondary market activity during the summer months keeps many participants on the sidelines," a sellsider said in a market update for the week.

Last week, "tax-free municipal bond yields notched slightly lower during the week along with the treasury market."

Even so, the state of Maine was in the market Monday, bringing $55.845 million in general purpose general obligation bond anticipation notes.

The notes were a sort of stop-gap way to finance state capital requirements until a longer-term bond can be issued, explained Barbara Raths, the state's deputy treasurer.

"It went well overall," she said.

"We were looking at an interim process. We had a negotiated contract with UBS and we'll determine where we're going to go from here. We feel the rates were competitive."

The notes (MIG1) were sold on a limited competitive basis, Raths said, with Banc of America Securities LLC coming out on top against Wachovia Bank and Fidelity Capital Markets.

The net interest cost for the tax-exempt portion of the notes was 1.64592%, and the NIC for the taxable portion was 3.43693%.

The coupon for the tax-exempt portion was 2.5%, and the coupon for the taxable portion was 3.45%, both priced at par.

Proceeds will be used for interim financings until a long-term bond is issued for capital projects.

Elsewhere on Monday, the Mississippi Business Finance Corp. had been expected to price $71.05 million in series 2008 variable-rate demand revenue bonds through lead manager Morgan Keegan, but calls to the issuer were not immediately returned.

Those bonds (A1/VMIG1) initially bear interest at the weekly rate and proceeds will be used for capital improvements.

Arizona Health sale planned

Looking to upcoming sales, the Arizona Health Facilities Authority has a rather large deal planned for later this month. The authority plans to sell $912.15 million in series 2008 revenue bonds, according to a preliminary official statement.

The bonds (/AA-/AA-) will be sold through senior managers Morgan Stanley and Merrill Lynch on Aug. 28.

The sale includes series 2008D, 2008E and 2008F bonds, but the exact breakdown of each series has not been determined at this time.

Proceeds will be used to finance the acquisition of the Sun Health Boswell Hospital and the Sun Health Del E. Webb Hospital from the Sun Health Corp.

N.C. Medical Care deal

Also ahead this month, the North Carolina Medical Care Commission expects to price $196.96 million variable-rate bonds for Novant Health on Aug. 18, a source said Monday.

The bonds (Aa3//AA-) will price initially with a weekly interest rate.

The $70 million series 2008A and $75.09 million series 2008B revenue refunding bonds are due Nov. 1, 2028.

J.P. Morgan Securities Inc. will manage the negotiated sale.

The $50.87 million series 2008C bonds due May 1, 2026 will be sold in a negotiated sale managed by BB&T Capital Markets.

Proceeds will be used to refund $46.74 million from the series 1996 revenue bonds, $88.03 million from the series 1998A revenue refunding bonds and $51.5 million from the series 1998B revenue bonds.

Oregon Housing bonds to price

Coming up this week, the Oregon Housing and Community Services Department intends to sell the previously announced $92.71 million mortgage revenue bonds Tuesday, according to a sale calendar.

The sale includes $52.53 million series 2008G and $5.53 million series 2008H fixed-rate bonds and $34.65 million series 2008I variable-rate bonds with a weekly interest rate.

The series 2008G bonds have serial maturities from 2013 through 2023 and terms due 2028 and 2030.

The series 2008H bonds have maturities from 2009 through 2012, and the series 2008I term bonds are due 2037.

J.P. Morgan Securities is the senior manager of the negotiated sale.

Proceeds will be used to purchase $89.929 million of new mortgage loans.

Also coming up on Tuesday, Baltimore County in Maryland is expected to price $81.6 million in series 2008 commercial paper bond anticipation notes, a sellside source confirmed Monday.

The offering includes $35 million in consolidated public improvement commercial paper BANs and $46.6 million in metropolitan district commercial paper BANs. The maximum maturity for the BANs is 270 days.

The notes (//F1+) will be sold on a negotiated basis with Banc of America Securities LLC as the senior manager.

Proceeds will be used for county expenditures pending the sale of an upcoming bond.

Fremont Union High School G.O.s

Also ahead, Fremont Union High School District and the Board of Supervisors of Santa Clara County in California plan to price $80 million general obligation bonds in a competitive sale on Thursday, according to a preliminary official statement.

The series A bonds (Aa2/AA+/) have serial maturities from 2009 through 2033.

The bonds were approved in a 2005 election.

KNN Public Finance is the financial adviser.

Proceeds will be used to renovate and modernize Cupertino, Fremont, Homestead, Lynbrook and Monta Vista high schools.

Baylor College bonds eyed

In other upcoming sales, the Baylor College of Medicine in Texas is looking to sell $200 million in series 2008D medical facilities revenue refunding bonds, said a preliminary official statement. The bonds will be sold through the Harris County Cultural Education Facilities Finance Corp.

The bonds (/A/) will be sold on a negotiated basis with Citigroup Global Markets as the senior manager. The co-managers are Merrill Lynch, Wells Fargo Brokerage Services and Goldman, Sachs & Co.

The bonds are due from 2009 to 2018 with term bonds due 2023, 2028 and 2032.

Proceeds will be used to refund the college's outstanding series 1999B and 2005A bonds, both of which are auction-rate securities.

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