Issuers continue to probe auction-rate bonds, bid at own auctions; Orange Medical prices $264 million

By Cristal Cody and Sheri Kasprzak

New York, April 23 - As some states continue to investigate whether their financial advisors duped them into selling auction-rate securities, issuers continued to make bids for their own bonds.

New Jersey most recently joined eight other states investigating the possibility of wrongdoing by advisors who led issuers into auction-rate securities just before the market collapsed.

Leading the pack of new upcoming bids is St. Anthony's Medical Center and the St. Anthony's Medical Center Foundation of Missouri.

St. Anthony's will submit bids on $35 million in series 2006A, $35 million in series 2006B, $43.3 million in series 2005A and $43.3 million in 2005B auction-rate revenue bonds.

The bonds were sold through the Health and Educational Facilities Authority of the State of Missouri.

The auction for the series 2006A bonds will be held on Thursday, and the 2006B bonds will be auctioned on Friday.

The series 2005A bonds will be auctioned on Monday and the series 2005B bonds will be auctioned on Tuesday.

Meanwhile, the Orange Regional Medical Center led an active day of pricings with a $264.28 million offering of revenue bonds sold through the Dormitory Authority of the State of New York on Wednesday, the issuer told Prospect News.

The series 2008 bonds (Ba1//BB+) priced with a 6.33% true interest cost and 5.5% to 6% coupons to yield 5.05% to 5.5% for the serial maturities from 2011 through 2016, said Mark Rufer, senior director of public finance for the authority.

"Demand was good and the bonds were put away," he said.

The 2021 term bond priced with a 6.5% coupon to yield 6.05%. The 2029 term bond priced with a 6.125% coupon to yield 6.3%.

The 2037 term bond priced with a 6.25% coupon to yield 6.35%.

Merrill Lynch & Co. is the senior manager.

Proceeds will be used to construct a 374-bed replacement hospital in the Town of Wallkill, N.Y.

MBTA prices $49.77 million

The Massachusetts Bay Transportation Authority priced $49.77 million senior sales tax bonds on Wednesday with a 4.2662% true interest cost, a source told Prospect News.

The 2008B bonds (Aa2/AAA/) priced with 3% to 5.25% coupons to yield 2.6% to 4.6%.

The bonds have serial maturities from 2011 through 2028 and a term bond due 2033.

"There was strong market demand and there was oversubscription on a lot of the maturities so the rates were reduced a little bit," the source said.

The pricing originally had been expected at $53.385 million.

The issuer "got a premium of a little over $4 million" on one of the maturities that lowered the par amount, the source said.

"People were looking for Massachusetts paper. Some people looking to fill their portfolios don't like to have too much from any one state."

Lehman Brothers managed the negotiated sale.

Proceeds will be used to refund the $29.75 million series A bond anticipation notes and $20.9 million from certain maturities of the series 1995 general obligation transportation system bonds, series 2000A and 2002A sales tax bonds and the series 2005A assessment bonds.

California water bonds price

Elsewhere, the California Department of Water Resources was expected to price $633.155 million Central Valley Project water system revenue bonds on Wednesday. The pricing details could not be confirmed Wednesday.

The series AE bonds (Aa2/AAA/) 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.

Illinois also was expected to price $125 million general obligation bonds in a competitive sale on Wednesday.

The Wayne County Airport Authority in Detroit had planned to price $145 million airport revenue refunding bonds on Wednesday.

The series 2008A Detroit Metropolitan Wayne County Airport bonds are insured through Assured Guaranty Corp.

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

Proceeds will be used to refund portions of the outstanding $141.72 million series 2002A airport revenue bonds that were insured by Financial Guaranty Insurance Co.

Additional information about the sales was not immediately available.

In other news, Scottsdale, Ariz. priced $230 million in bonds Wednesday, but the terms were not immediately available, a source with the issuer said.

The sale included $120 million in general obligation bonds (Aaa/AAA/AAA) and $110 million in series 2008A excise tax revenue bonds (Aa1/AAA/AA+). The bonds were sold on a competitive basis.

The G.O.s are due from 2009 to 2034 and proceeds will be used for various community projects. The excise tax bonds are due from 2009 to 2032 and proceeds will be used for water and sewer improvements.

Wisconsin home ownership bonds

Looking to upcoming bond sales, the Wisconsin Housing and Economic Development Authority expects to price $150 million home ownership revenue bonds on April 30, the issuer said Wednesday.

The authority also expects to price $38 million series 2008B variable rate demand bonds due Sept. 1, 2034 later in May, said Sherry Gerongale, treasury manager.

The $150 million series 2008A fixed-rate bonds also include $76.21 million that will price as variable rate demand bonds due on Sept. 1, 2038.

"That's typical for us as an issuer," Gerongale said. "The majority of our home ownership issued for single family bonds contains a portion of fixed rate and a portion of variable rate. Typically at the same time of the pricing, we are applying a swap to the bonds. We access a lower cost of funds by putting part of the bonds out as variable seven-day floaters and then swapping them to a fixed rate."

The fixed-rate bonds have term bonds due in 2023, 2028 and 2032.

Merrill Lynch & Co. is the senior manager of the negotiated sale and the sole manager of the variable rate demand bonds.

Proceeds will be used to refund existing loans and to purchase new mortgage loans.

St. Anselm College in New Hampshire plans to price $62.705 million revenue bonds on May 7, a sell-side source said Wednesday.

The series 2008 bonds (A3//) will price with a daily variable rate mode through the New Hampshire Health and Education Facilities Authority.

"It's a floating rate deal, as opposed to fixed rate, so the markets are very accommodating for this kind of structure," the source said.

Piper Jaffray will manage the negotiated sale.

Proceeds will be used to refund the outstanding series 1998, series 1999 and series 2004 bonds and fund the construction of a residence hall and renovation of existing facilities.

North Carolina power agency plans deal

Also coming up, the North Carolina Eastern Municipal Power Agency intends to price $430.855 million in power system revenue bonds, a preliminary official statement said Wednesday. The pricing date could not be confirmed by press time Wednesday.

The sale includes $357.675 million in series 2008A refunding bonds and $73.18 million in series 2008B taxable refunding bonds.

Citigroup Global Markets is the lead manager for the negotiated sale.

Proceeds from the deal will refund the agency's outstanding series 2004A, 2004B, 2006A, 2006B and 2007A auction-rate and weekly rate bonds.

In other pricing news, the Arizona Transportation Board confirmed its plans to price $200 million in series 2008A revenue bonds the week of May 5.

"The pricing date is scheduled for the week of May, depending on market conditions," said Tim Tate, spokesman for the board in an interview Wednesday.

The bonds (Aa1//) will be sold on a negotiated basis with Citigroup Global Markets as the senior manager.

Proceeds from the sale will be used for construction projects on the board's five-year plan across the state of Arizona, Tate said.

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