Pittsburgh Water, Rand lead pricing action; ripples from auction-rate crisis still felt

By Cristal Cody and Sheri Kasprzak

New York, June 2 - Monday proved to be a light day for pricing action, led by a $93.565 million sale of revenue bonds from Rand Corp.

Elsewhere, the aftershocks from the auction-rate crisis were still being felt as health-care issuers continued to either convert or bid on their auction-rate securities.

"It's taken a few of them a while to convert," said one market source asked Monday about the continued conversion activity.

"Some issuers are probably weighing their options and deciding which route is the best to take. When this first happened, there was that initial flood of stuff getting converted, but that's tapered off substantially."

Ratings agencies reported in interviews last month to Prospect News that the wait time to assign ratings had increased - doubling to four weeks in the case of one agency - because of numerous issuers converting or refinancing auction-rate securities.

The agencies said the delays are expected to continue through summer.

Rand prices bonds

Moving back to the Rand offering, the company priced $93.565 million in revenue bonds through the California Infrastructure & Economic Development Bank, a sellside source said.

The 2008B bonds (Aaa/AA+/) have a 1.15% initial rate. The rate resets weekly.

The bonds are due April 1, 2042 and were sold on a negotiated basis with Banc of America Securities as the senior manager.

Proceeds will be used to refund Rand's series 2002B variable-rate revenue bonds.

The company had planned to sell the bonds on May 22 but delayed the sale to receive ratings and to complete documents.

Pittsburgh water bonds

In other pricing news, the Pittsburgh Water and Sewer Authority priced $127.065 million revenue bonds with 4.46% to 6.61% coupons, the issuer said Monday.

The fixed-rate bonds priced late Thursday, but the final terms, including the true interest cost, are still being calculated, said finance director Steve Simcic.

"We have quite a number of bids going on for that," he said.

The $57.4 million series 2008A first-lien revenue refunding bonds priced with 6.36% to 6.61% coupons.

The $69.665 million series 2008D1 first-lien revenue bonds priced with 4.46% to 4.8% coupons, Simcic said.

The maturities were not available.

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

JPMorgan was the senior manager of the negotiated sale.

Proceeds will be used to fund the advance refunding of certain maturities from the authority's series 1993A and 2003 bonds, to fund the premium for the bond insurance policy and to fund the costs of capital additions.

Chicago expected to price bonds

Elsewhere, the city of Chicago was expected to price $498.34 million in series 2008 general obligation bonds Monday, but the issuer did not return calls for the terms on the sale by press time.

The bonds (//AA) were sold on a negotiated basis with Depfa First Albany and Jackson Securities as the senior managers.

Proceeds will be used for public right-of-way improvements, the acquisition of private property, the construction of municipal facilities and the refunding of existing bonds.

Waterbury to price $320 million

Waterbury, Conn., also was expected to price $320 million taxable G.O. pension bonds on Monday.

The series 2008 bonds (Aaa//AAA) have serial maturities from 2009 through 2021 and a term bond in 2037.

The bonds are insured by Assured Guaranty Corp.

William Blair & Co. will manage the negotiated sale.

Proceeds will be used to finance a portion of the city's unfunded past pension benefit obligations for municipal employees.

The sale could not be confirmed by press time.

Utah Telecom bonds planned

The Utah Telecommunication Open Infrastructure Agency planned to price $185 million taxable adjustable-rate special revenue and refunding bonds on Monday.

The series 2008 bonds will price initially with a weekly interest rate effective through June 11.

The bonds are due June 1, 2040.

KeyBanc Capital Markets was slated to manage the negotiated sale.

Proceeds will be used to refund and retire the $82.6 million series 2004 revenue bonds, $30 million series 2006 revenue bonds and $21.354 million series 2007 revenue priority bonds; to finance the installation of fiber optic cable that passes by 11 cities in Utah; and to provide working capital for the agency.

Calls to confirm the deal were not immediately returned.

Conversions continue

Months after the auction-rate crisis struck municipal issuers, some are still converting their auction-rate securities.

On Monday, the Stanford Hospital and Clinics announced its plans to convert $150 million in series 2003B, 2003C and 2003D revenue bonds.

The bonds (Aaa//AAA) will be converted to a weekly mode.

The series 2003B bonds will be converted on Tuesday, the 2003C bonds on June 10 and the 2003D bonds on June 17.

The bonds were sold through the California Health Facilities Financing Authority.

The remarketing agents are Morgan Stanley and Goldman, Sachs & Co.

The Northeast Georgia Health System intends to submit bids on $52.525 million in series 2005A revenue anticipation certificates, according to a notice released Monday.

The certificates, which are due 2026, were sold through the Hospital Authority of Hall County and the City of Gainesville.

The issuer plans to submit a bid of 3.51% for all of the bonds at the next auction on Wednesday.

Avera Health sale expected

Moving to upcoming offerings, Avera Health of South Dakota confirmed its plans to sell $252.735 million in series 2008 revenue bonds in three sales set in June and early July, according to a sellsider connected to the deal Monday.

The sale includes $139.92 million in series 2008A variable-rate demand bonds, $51.435 million in series 2008B fixed-rate bonds and $61.38 million in series 2008C variable-rate demand bonds.

The bonds (A1//) will be sold through the South Dakota Health & Education Facilities Authority.

The 2008A and 2008B bonds are expected to price June 18 and the 2008C bonds on July 1, the sellsider said.

"Those are the dates we've set," the source said. "We're, of course, looking at the market conditions, so those could change."

The market conditions that have plagued some issuers aren't necessarily a problem for Avera, the source said.

"We feel pretty confident about this sale," he said.

The bonds will be sold on a negotiated basis with Dougherty & Co. and Merrill Lynch as the senior managers.

Proceeds will refund all of the system's outstanding variable-rate debt and pay for the construction, acquisition and equipment of a new facility to house a cancer center and an outpatient surgery center.

St. Luke's to sell $175 million

St. Luke's Hospital and Health Network in Pennsylvania expects to price $175 million revenue bonds on Tuesday, a source told Prospect News.

The series 2008A fixed-rate bonds (Baa1//) will price through the Northampton County General Purpose Authority.

Merrill Lynch & Co. will manage the negotiated sale.

Proceeds will be used to construct and equip a portion of a new medical campus at the Riverside Campus; to pay a portion of the cost of a cancer center and a health pavilion with about 75 inpatient beds; to fund the cost of the acquisition of a health and wellness center known as Union Station Plaza; to pay a portion of the cost of the acquisition of 280 acres in Bethlehem Township and for other projects.

Silver Cross's $88.03 million deal

Silver Cross Hospital and Medical Centers intends to price $88.03 million revenue refunding bonds the week of June 9, a sellside source said Monday.

The series 2008A fixed-rate bonds (/A/A) will be sold through the Illinois Finance Authority.

The sale date is "tentative," though the source declined to cite the reasons.

Lehman Brothers will manage the negotiated sale.

Proceeds will be used to refinance and redeem the series 2005B and 2005D auction-rate revenue bonds.

San Diego bond sale planned

San Diego County in California tentatively plans to price $75 million notes on Thursday, the issuer told Prospect News.

The series 2008A tax and revenue anticipation notes (MIG 1//) were expected to price on Monday, but "supply in the market" pushed back the sale to Thursday, said Ebony Shelton, finance director.

Proceeds will be used to fund seasonal cash flow needs.

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