Fewer issuers selling on a competitive basis, source says; Lubbock sells $84.5 million in certificates

By Cristal Cody and Sheri Kasprzak

New York, April 29 - More and more issuers are looking to sell their bonds on a negotiated basis in the present conditions, said one sell-side market source Tuesday.

"It makes sense because there has been a good deal of market volatility," said the insider.

"Issuers will go with an underwriter they've worked with before, someone they trust, and they know they're going to get the best possible terms. Going out competitive, there's less certainty, especially in a market like this."

An issuer told Prospect News earlier this week that market volatility made selling its bonds on a negotiated basis necessary.

Meanwhile, the turmoil is still forcing issuers to convert their auction-rate securities.

On Tuesday, the District of Columbia said it will convert $142.2 million in series 1998 auction-rate revenue bonds.

The bonds being converted include $71.1 million in series 1998B bonds and $71.1 million in series 1998C bonds, a notice of conversion said.

Both bonds will be converted to a fixed-rate mode on May 15.

The remarketing agents are Citigroup Global Markets, Wachovia Bank, JPMorgan, Banc of America Securities and Ferris, Baker Watts Inc.

Lubbock brings $84.5 million

Moving to Tuesday's pricing action, Lubbock, Texas, priced $84.5 million certificates of obligation and $2.1 million general obligation bonds on Tuesday, a source told Prospect News.

The series 2008 tax and waterworks system surplus revenue certificates priced with a 4.42% true interest cost. The series 2008 general obligation bonds priced with a 4.8% true interest cost.

Morgan Stanley was the senior manager of the negotiated sale.

Proceeds will be used for street improvements and upgrades to the city's airport, sewer and water system and fire stations.

Elsewhere, the Illinois Housing Development Authority priced $57.625 million variable-rate housing bonds with 2.75% to 3% initial rates on Tuesday, a source told Prospect News.

The $14.17 million series 2008A bonds for Larkin Village and the $5.57 million series 2008C bonds for the Florida House priced with 3% initial rates.

The $37.885 million series 2008B bonds for Lakeshore Plaza priced with a 2.75% initial rate.

The interest rates on the bonds (Aaa/AAA/) reset weekly.

The series 2008A bonds are due Jan. 1, 2027. The series 2008B bonds are due July 1, 2027 and the series 2008C bonds are due July 1, 2041.

JPMorgan was the senior manager of the negotiated sale.

Proceeds will be used to refinance outstanding series 1997 revenue bonds, series 2000A revenue bonds and series 2006C variable rate bonds.

Indianapolis prices $59.45 million

In other pricing news, the Indianapolis Local Public Improvement Bond Bank priced $59.45 million consolidated tax district bonds with a 4.7139% true interest cost on Tuesday, the issuer told Prospect News.

The series 2008A bonds (Aa1/AAA/AA+) priced with 3.25% to 5% coupons to yield 2.85% to 4.88%, said Kevin Taylor, executive director.

The bonds have serial maturities from 2011 through 2038.

"We had quite a bit of interest from trust funds, mostly on the short end, and institutional accounts for the serials out to 2021 through '38," Taylor said.

"The Indianapolis name tends to be well received by the trust and individual investors so that played out well today on the first 10 years of the terms."

City Securities was the senior manager of the negotiated sale.

About $48.5 million of the proceeds will be used for a parking garage and other sites that are part of a planned JW Marriott hotel complex.

"This is all part of the convention center expansion and the need for additional hotel space to meet convention and conference commitments," Taylor said. "This will be a 1,000-room JW Marriott hotel along with three smaller Marriott brands right there on the site, and a new ballroom for the convention center, which will be the largest in the Midwest when it opens."

Virginia Beach, Va., priced $51.625 million general obligation public improvement refunding bonds with a 2.878% true interest cost on Tuesday, the issuer told Prospect News.

Banc of America Securities LLC was the successful bidder in the competitive sale out of 13 bidders, "which is a tremendous number," said Richard Dunford, debt manager for the city's finance department.

"I think that was probably a record. There was low volume today and we hit the market well positioned. It's a short bond, so it had a lot of interest."

The series 2008A bonds (Aa1/AAA/AA+) priced with 5% to 3.5% coupons to yield 1.885% to 3.33%, he said.

The bonds have maturities from Oct. 1, 2008 through Oct. 1, 2015.

Proceeds will be used to refund the maturities due Aug.1, 2008 through Aug. 1, 2015 from the city's series 1998 general obligation refunding bonds.

Kentucky prices revenue bonds

Elsewhere, the Kentucky State Property and Buildings Commission priced $297.785 million in project 89 revenue bonds, said Rachel Putnam, debt manager with the state.

Putnam said the terms would not be available until Wednesday.

The bonds (Aa3/A+/AA-) were sold on a negotiated basis with Citigroup Global Markets as the lead manager.

Proceeds from the sale will be used to finance the commonwealth's capital projects and refund state debt through the open-market purchase of Kentucky Asset/Liability Commission variable-rate notes.

In other news, the Tennessee Housing Development Agency priced $55 million in homeownership program bonds Tuesday, the issuer confirmed, but the terms were not immediately available.

The bonds, the agency's chief financial officer Trent Ribley said Monday, will be sold mostly to retail investors.

The bonds were sold on a negotiated basis through lead manager Morgan Stanley.

Proceeds will be used for the agency's first-time homebuyer mortgage program.

Also on Tuesday, the Leander Independent School District priced $277 million in unlimited tax school building and refunding bonds, the issuer said. The terms will not be available until Wednesday, however.

The bonds (//AAA) were sold on a negotiated basis with Citigroup Global Markets as the lead manager.

Proceeds from the sale will be used to construct and equip new buildings, renovate existing facilities, purchase land and buses, as well as refund a portion of outstanding unlimited tax debt.

Elsewhere, the North Carolina Eastern Municipal Power Agency was set to price $430.855 million in power system revenue bonds (/BBB/). Calls to the issuer were not returned by press time Tuesday.

The bonds, which are due 2013 to 2024, were sold on a negotiated basis with Citigroup Global Markets as the senior manager.

Proceeds will refund the agency's series 2004A, 2004B, 2006B and 2007A bonds.

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

North Carolina utility to sell bonds

Looking to upcoming offerings, the North Carolina Municipal Power Agency Number 1 intends to price $426.45 million fixed-rate bonds, according to a preliminary official statement.

The sale includes $344.81 million series 2008A electric revenue refunding bonds, $9.39 million series 2008B electric revenue refunding bonds and $72.25 million series 2008C revenue bonds.

The series 2008A bonds have maturities from 2013 through 2020. The series 2008B bonds are due in 2013. The series 2008C bonds have maturities from 2009 through 2020.

Morgan Stanley is the senior manager of the negotiated sale.

Proceeds will be used to finance the agency's share of the costs of capital improvements to the Catawba Nuclear Station and to refund the $76.66 million series 1997 revenue bonds, $49.81 million series 1998A revenue bonds, $149.7 million series 2003C revenue bonds, $31.4 million series 2005A refunding revenue bonds, $1.825 million series 2005B refunding revenue bonds, $61.25 million series 2005C refunding revenue bonds and $2.9 million series 2005D refunding revenue bonds.

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