Pricing picks up as issuers test the waters; Florida BOE sells $150 million in capital outlay bonds

By Cristal Cody and Sheri Kasprzak

New York, Oct. 28 - Despite some skittishness in the marketplace over the past few weeks, some issuers braved shaky market conditions to price their bonds Tuesday.

The offerings were led by the Florida Board of Education, which sold $150 million in capital outlay bonds. Two deals were done by Suffolk County, N.Y., which sold $87.9 million in series 2008B general obligation bonds and $85 million in series 2008 tax anticipation notes.

Even so, some issuers were just not ready to risk it.

The Metropolitan Washington Airports Authority delayed the sale of $175 million in series 2008B revenue bonds, said Lynn Hansen, the authority's chief financial officer.

"We've been trying to sell these bonds since the beginning of the month, but they've been shelved once again," Hansen said.

"The market has closed for us, as it has for a lot of the alternative minimum tax bonds out there."

One market source said Tuesday that traditionally higher-yielding sectors like airports have had a harder time selling their bonds.

"It's a riskier market and right now, investors are trying to avoid overly risky bonds," he noted.

The bonds (Aa3/AA-/AA) were set to price Tuesday through lead manager Siebert Brandford Shank & Co.

Hansen said the authority is keeping an eye on the market and will attempt to sell the bonds as soon as the market improves.

"We've tapped into commercial paper, so we have plenty of cash on hand," Hansen added.

Once sold, the bonds' proceeds will pay for capital project costs, capitalized interest on outstanding bonds, a deposit to a reserve account and costs to terminate interest rate swap agreements with Wachovia Bank and the Bank of Montreal.

Florida BOE bonds price with 5.41% TIC

Moving back to those Florida BOE bonds, the capital outlay bonds were sold with a 5.41% true interest cost, the issuer told Prospect News Tuesday.

The series 2008A bonds (Aa1/AAA/AA+) priced with 5% to 5.5% coupons to yield 2% to 5.57%, said Carol Bagley, bond development supervisor for Florida's bond finance division.

The bonds have serial maturities from 2009 through 2026 and terms due in 2028, 2033 and 2038.

Barclays Capital was the winning bidder out of seven bids in the competitive sale.

The proceeds will be used for capital outlay projects.

Suffolk County prices two

In other pricing news, Suffolk County, N.Y., brought two deals to market on Tuesday.

The largest was $87.9 million in series 2008B G.O. bonds, said a source at the county comptroller's office. That sale, a statement from the comptroller's office said, is the largest sale by a local jurisdiction in New York State since September's fiscal crisis began.

The winning bidder for the competitive sale was Prager, Sealy & Co. with a net interest cost of 4.95%. The TIC came out to 4.935%. There were five bidders in the sale, including Prager Sealy, Citigroup Global Markets, Morgan Stanley, Commerce Capital Markets and Merrill Lynch.

The full details of the bonds (Aa3/AA/AA-) were not immediately available.

According to a statement released by the comptroller's office, the sale marks the first time a New York State sale was conducted using Fed wires for deposits.

Proceeds from the deal will be used for capital improvements throughout the county.

The county also priced $85 million in series 2008 tax anticipation notes, the issuer said.

The notes (MIG 1/SP-1+/) were also sold competitively, with Citigroup Global Markets winning the bid.

The notes are due Sept. 10, 2009 and priced with a 1.51% coupon at par.

Proceeds will be used for the county's ongoing cash flow needs.

"We expected to do well, but having seen rates over 6% for Monroe County [N.Y.] last week, we were pleasantly surprised to be oversubscribed with eight different firms offering to buy the entire issue," Joseph Sawicki, the county's comptroller, said in a statement.

Hennepin sells $63.335 million G.O.s

Hennepin County in Minnesota also found more bites this go around after postponing its sale from earlier this month.

The county priced $63.335 million G.O. bonds with a 4.65% TIC on Tuesday, a market source told Prospect News.

"It was very good especially considering the muni market was backed up a little bit today," the source said. "But the sale went really well. Almost the entire issue was not reoffered."

The series 2008D bonds (Aaa/AAA/AAA) priced with 4% to 5% coupons.

The bonds have serial maturities from 2009 through 2028.

Piper Jaffray was the winning bidder out of six bids in the competitive sale.

The proceeds will be used for library and capital improvements and to refund the callable maturities from the series 1998B G.O. bonds.

Minnesota school prices with 6.75% TIC

Still, one issuer decided to indefinitely postpone half of a planned sale on Tuesday.

The Independent School District No. 621 in Mounds View, Minn., sold $26.07 million G.O. bonds with a 6.75% TIC on Tuesday and put off the sale of $27.605 million in series 2008B school building refunding bonds, according to information released to Prospect News.

The series 2008A bonds (Aa2//) priced with 6% to 7% coupons.

The bonds have serial maturities from 2011 through 2024.

Wells Fargo Brokerage Services was the winning bidder in the competitive sale.

The proceeds will be used to fund an actuarial liability to pay post-employment benefits to officers and employees.

Houston sells $423 million in bonds, certificates

Houston, Texas, was expected to complete the sale of $423 million in bonds and certificates (Aa3/AA/) on Tuesday, but the final pricing results were not immediately available.

The sale included $393 million in series 2008A public improvement refunding bonds and $30 million in series 2008B tax and revenue certificates of obligation.

Goldman, Sachs & Co. was the senior manager of the negotiated sale.

The proceeds will be used to refund and defease outstanding G.O. commercial paper notes and to fund the acquisition of real estate for a public facility and other public works projects.

Memorial Hermann to sell $228.375 million

Moving to upcoming sales, the Memorial Hermann Healthcare System of Texas is expected to price $228.375 million in series 2008B hospital revenue refunding bonds sometime in November, said a preliminary official statement. The bonds will price through the Harris County Health Facilities Development Corp.

Though no formal date has been set for the offering, a sellside source told Prospect News the sale is expected to take place in November.

The bonds (A2/A/) will be sold on a negotiated basis with RBC Capital Markets as the senior manager. The offering includes term bonds due 2028, 2031 and 2035.

Proceeds will be used to repay a bridge loan and to fund a debt service reserve fund.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.