Market conditions get rough for issuers; Houston sells $80 million TRANs

By Cristal Cody and Sheri Kasprzak

New York, June 18 - Despite a heavy load of pricings Wednesday, some issuers said market conditions are anything but ideal right now. At least two issuers postponed sales scheduled for Wednesday and another, whose offering did price, said conditions were not optimal for pricing new issue bonds.

The Orlando-Orange County Expressway Authority in Florida, which was set to price $225 million in bonds Wednesday, put its offering off until market conditions improve.

The University of Colorado Hospital Authority also postponed its bond sale of $92.45 million in revenue bonds, citing issues with a swap termination.

Heading up Wednesday's heavy pricing action was $80 million in series 2008 tax and revenue anticipation notes from the City of Houston, a sellside source said.

The notes (Aa3/AA-/AA) priced with a 1.69886% true interest cost with Citigroup Global Markets as the winning bidder.

"We had 11 bidders, so we feel like interest was really strong for this sale," said the source. "We're really pleased with that."

The notes are due June 30, 2009 and priced at par with a 3% coupon.

Proceeds will be used for general expenses ahead of the collection of taxes and other revenues.

School District No. 5 of Anderson County, S.C., prices

School District No. 5 of Anderson County, S.C., priced $77 million general obligation bonds in a competitive sale on Wednesday, a source with the issuer told Prospect News.

The series 2008 bonds have serial maturities from 2013 through 2038.

The final pricing terms are expected to be available on Thursday.

The McNair Law Firm is the district's bond counsel.

Proceeds will be used to acquire land, construct and equip three new elementary and middle schools, construct and equip an auditorium at Calhoun Academy of the Arts and make improvements and additions to existing schools.

St. Joseph Health System in California also priced $137 million variable-rate refunding revenue bonds with a 1.5% initial rate on Wednesday, a source told Prospect News.

The series 2008B bonds (Aa3//) priced through the Lubbock Health Facilities Development Corp.

Morgan Stanley managed the negotiated sale.

Proceeds will be used to refund the outstanding series 1998 fixed-rate revenue bonds.

New Mexico prices with 3.11% TIC

The New Mexico State Board of Finance priced $71.27 million G.O. bonds with a 3.112% TIC, a source with the issuer said Wednesday.

The series 2008A refunding bonds (Aa1/AA+/) priced with 3% to 5% coupons to yield 1.9% to 3.36% from March 1, 2009 through March 1, 2013.

Citigroup Global Markets was the winning bidder out of six bids in the competitive sale.

"The number of bids was on the low end," the source said. "We typically see closer to 10 bids, so six is somewhat on the low side, but we're still happy with the results."

Proceeds will be used to refund the state's outstanding series 2001 and 2003 G.O. bonds.

West Palm Beach prices with 4.19%-5.17% TICs

West Palm Beach, Fla., priced $68.83 million refunding and revenue bonds with 4.19% to 5.17% TICs, said Randy Sherman, finance director.

The results were higher than expected.

"They came in pretty much 10 basis points higher than we originally offered," he said.

The $53.995 million series 2008A utility system revenue refunding bonds priced with a 5.1669% TIC. They priced with 3% to 5% coupons to yield 2.83% to 4.9%.

The $14.835 million series 2008B revenue bonds priced with a 4.1918% TIC. They priced with 3% to 4.25% coupons to yield 2.44% to 4.49%.

The series 2008A bonds have serial maturities from 2010 through 2029, and the series 2008B bonds have serial maturities from 2009 through 2020.

The bonds (Aaa/AAA/AAA) are insured by Financial Security Assurance.

Citigroup Global Markets was the senior manager of the negotiated sale.

Proceeds will be used to refund the city's outstanding $52.875 million series 2005 variable-rate revenue refunding bonds and to pay for utility system improvements.

Thomas Health and Oregon sales

Thomas Health System was expected to price $145 million revenue bonds on Wednesday.

The series 2008 bonds are pricing through the West Virginia Hospital Finance Authority.

The bonds are due Oct. 1, 2043.

Raymond James is the manager of the negotiated sale.

Proceeds will be used to refinance a $45 million loan used to acquire St. Francis Hospital, construct a six-story hospital pavilion and purchase equipment.

The Oregon State Board of Higher Education also planned to price $200 million G.O. bonds on Wednesday.

The series 2008A bonds are pricing for the University of Oregon.

Citigroup Global Markets is the manager of the negotiated sale.

Proceeds will be used for an arena at the university.

Calls for additional information were not returned.

Empire State Development sale

In other news Wednesday, the Empire State Development Corp. in New York successfully priced $400 million in fixed-rate correctional and youth service contract revenue refunding bonds, said an issuer source reached Wednesday.

The source said the pricing terms would not be available on Wednesday.

Proceeds from those bonds will be used to refund the corporation's outstanding series 2002B-2 through 2002B-4 and series 2002B-9 bonds.

Kentucky student loan sale

On Tuesday, the Kentucky Higher Education Student Loan Corp. priced $300 million in series 2008A-1 variable-rate tax-exempt and series 2008A-2 taxable variable-rate demand revenue and refunding bonds, James Ackinson, chief financial officer for the corporation, told Prospect News Wednesday.

The corporation priced $179.6 million in series 2008A-1 tax-exempt AMT bonds with a 2% initial rate, $83.4 million in series 2008A-2 tax-exempt AMT bonds with a 2% initial rate and $37 million in series 2008A-3 taxable variable-rate demand revenue and refunding bonds with a 2.55% initial rate. The bonds bear interest at the weekly rate.

The 2008A-1 bonds are due June 1, 2037; the 2008A-2 bonds are due June 1, 2038; and the 2008A-3 bonds are due June 1, 2038.

"The conditions for student loans are horrible, but we couldn't sell student loans so we are relying on those letters of credit to achieve market acceptance," Ackinson said.

"We traded just above market levels and we expect those to decline in yields. They're not overly cheap, but over market, so we expect, once they're in the remarketing mode, that these will trade right with any other demand revenue and refunding bonds with a similar rating. We're pleased with the results. It's what we expected. This is why we pursued this particular route."

The bonds were sold on a negotiated basis with Bank of America as the senior manager.

Proceeds will refinance $217 million in auction-rate bonds and issue $83 million in new, tax-exempt bonds used to pay down a line of credit.

Orlando-Orange County sale postponed

Elsewhere Wednesday, the Orlando-Orange County Expressway Authority delayed the pricing of its $225 million sale of bonds, said Lindsay Hodges, spokeswoman for the authority.

"It's been postponed due to market conditions," Hodges said.

No new pricing date has been set at this time. The authority, according to Hodges, is feeling out the market for better conditions before settling on a new pricing date.

The bonds were expected to price Wednesday through lead manager Citigroup Global Markets.

The bonds are due 2009 to 2028.

Proceeds will be used for capital projects.

University of Colorado Hospital Authority delays

The University of Colorado Hospital Authority set a new sale date for $92.45 million revenue bonds after issues with terminating a swap cropped up, said James Wilson, finance analyst.

"There were issues that had to be worked out," he said. "We're going to market next week."

The $19.14 million series 2008A bonds and $73.31 million series 2008B bonds will price June 25 with an initial weekly interest rate.

The series 2008A bonds are due Nov. 15, 2024, and the series 2008B bonds are due Nov. 15, 2031.

Citigroup Global Markets is the manager of the negotiated sale.

Proceeds will be used to refund the $72.41 million series 2007A refunding revenue bonds and to finance equipment at the University of Colorado Health Sciences Center's Fitzsimons Campus.

Port of Houston Authority refunding bonds

The Port of Houston Authority of Harris County, Texas, expects to price $275 million refunding bonds on June 26, a source familiar with the sale said Wednesday.

The series 2008A bonds (Aa1/AAA/) will be sold to refund outstanding commercial paper notes and the series 1998A port improvement bonds.

Merrill Lynch & Co. is the senior manager of the negotiated sale.

Reno to sell $87.5 million

In other upcoming offerings, Reno, Nev., intends to price $87.5 million in series 2008 hospital revenue bonds for the Renown Regional Medical Center project, according to a preliminary official statement.

The sale includes $43.75 million in series 2008A bonds and $43.75 million in series 2008B bonds. Both series of bonds are due June 1, 2041.

The bonds (/AAA/A-1/) will be sold on a negotiated basis with Merrill Lynch as the senior manager.

The bonds initially bear interest at the weekly rate.

Proceeds will be used to refund the city's outstanding series 2006A and 2006B bonds.

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