Puerto Rico Aqueduct prices $1.46 billion bonds at 6.05%; North Texas Tollway brings $2.315 billion

By Cristal Cody and Sheri Kasprzak

New York, March 6 - An improvement in market conditions Wednesday helped bolster the sale of $1.461 billion in revenue bonds for the Puerto Rico Aqueduct & Sewer Authority.

"Market conditions yesterday [Wednesday] saw an improvement in comparison to the last few days, providing the opportunity to place this offer," said Jorge Irizarry, president of the Government Development Bank for Puerto Rico, in a statement.

"Over 40 institutional investors placed orders generating a threefold oversubscription, clearly confirming the acceptance and attractiveness of Puerto Rico paper. The interest shown by these institutions is the strongest we have seen in the market in several months."

The bonds (Baa3/BBB-) priced with a 6.05% yield and an average life of 27 years, a statement from the authority said. Of the bonds, $1.2 billion were purchased in the United States and $30 million were purchased locally in Puerto Rico.

The bonds were sold on a negotiated basis with Citigroup Global Markets and Morgan Stanley as the co-lead managers for the segment sold in the United States. Popular Securities was the senior manager for the bonds sold locally.

The offering included $1.3 billion in revenue bonds and $161 million in revenue refunding bonds. The revenue bonds are due from 2021 to 2027 with term bonds due 2032 and 2034 and the revenue refunding bonds are due from 2017 to 2027 with term bonds due 2032, 2037, 2047 and 2047 with capital appreciation bonds due 2012 to 2016. The full terms of the bonds were not immediately available, according to a source familiar with the deal.

Financing boosts five-year plan

The financing, according to the statement, is a step towards assisting the commonwealth's five-year, $1.98 billion program for new facilities and improvements to the water delivery and sewage systems. Of the proceeds, $830 million will be used to restructure existing debt.

The projects to be developed with the proceeds include the Valenciano Reservoir in San Lorenzo, the expansion of the Patillas Filtration Plant and the rehabilitation of the Puerto Nuevo Sanitary Sewer Plant. The proceeds will also be used for the rehabilitation and expansion of the La Plata in Tao Alta, the construction of the Beatriz Reservoir in Caguas and the expansion of the Sanitary Sewer Plant in Yauco.

North Texas Tollway bonds price

In other billion-dollar offerings, the North Texas Tollway Authority was expected to price $2.315 billion revenue refunding bonds Thursday.

The bond offering included $1.413 billion in series 2008A first-tier current interest bonds, $233.2 million in series 2008B first-tier current interest bonds, $19.115 million in series 2008C first-tier taxable current interest bonds, $150 million in series 2008D first-tier insured capital appreciation bonds and $500 million in series 2008E first-tier put bonds.

The bonds carry an A2/A- rating, except series 2008D, which is expected to be rated Aaa/AAA. Series 2008D bonds are insured by Assured Guaranty.

Bear, Stearns & Co. is the lead underwriter.

The full pricing terms were not available by press time Thursday.

Conversions of auction-rates continue

In other news, issuers continued to announce plans to convert outstanding auction-rate bonds Thursday.

MedStar Health, Inc. said it will refund or convert its series 1998 auction-rate Medlantic/Helix securities, said a public notice released Thursday.

The company plans to convert or restructure the District of Columbia multimodal revenue bonds or refund the bonds on March 20, the notice said.

The bonds affected by the conversion or restructuring include $47.225 million in tranche I of series 1998A bonds; $47.225 million in tranche II of series 1998A bonds; $47.225 million in tranche III of series 1998A bonds; $71.1 million in series 1998B bonds; and $71.1 million in series 1998C bonds. All of the bonds mature 2038.

Also on Thursday, the OSF Healthcare System in Chicago said it will convert $53.8 million in series 2005B revenue refunding bonds on March 20.

The bonds will change from a 28-day auction period to a seven-day auction period beginning March 21, if sufficient clearing bids exist, the system's chief executive officer said in the notice.

The bonds were sold through the Illinois Finance Authority.

Boston's G.O.s price

In other news, Boston priced $162.715 million in general obligation bonds in a competitive sale, said Jackie Goddard with the city's finance department.

The deal included $126.185 million in series 2008A bonds and $36.53 million in series 2008B bonds.

The bonds were sold competitively with Lehman Brothers winning the bid for the 2008A bonds and Robert Baird winning the 2008B bonds.

The 2008A bonds are due from 2009 to 2028 with 5% coupons for each year and yields from 2.04% to 4.76%. The 2008B bonds are due from 2009 to 2015 with coupons from 3.25% to 4% and yields from 2.3% to 3.4%.

The true interest cost for the A bonds came in at 4.214071% and the true interest cost for the B bonds came at 3.1%.

Proceeds will be used to refund outstanding series 1998B bonds.

Chelan PUD sells $92.88 million

Elsewhere in Thursday's pricings, the Public Utility District No. 1 of Chelan County, Wash., priced $92.88 million consolidated system revenue refunding bonds with a 2.83% initial interest rate on Thursday, the issuer told Prospect News.

The series 2008B bonds (Aa2/AA/AA) will bear interest at a variable weekly rate, said Debra Litchfield, district treasurer.

"These were auction rate previously," she said. "We started seeing an increase in the rates on auctions. The insurer on this was XL, and before there was the potential of a failed auction, we opted to get out of the auction-rate mode and convert into a variable-rate mode."

The bonds are due July 1, 2032.

Lehman Brothers is the underwriter.

Proceeds will be used to purchase and hold in trust the $93.75 million outstanding principal amount of series 2007A revenue bonds.

Pennsylvania reschedules bond sale

The Pennsylvania Higher Educational Facilities Authority plans to price $99.365 million refunding revenue bonds for the State System of Higher Education on March 13, the issuer said Thursday.

The series AG bonds are due 2008 through 2024.

The authority also plans to price $71.55 million revenue bonds for Thomas Jefferson University on March 11, said Robert Baccon, assistant executive director of the Pennsylvania Higher Educational Facilities Authority and the Pennsylvania State System of Higher Education.

The series 2008A and 2008B revenue bonds will be sold in a negotiated sale managed by UBS Securities LLC.

Both bonds had been expected to price this week.

In other news, Florida plans to price $586.6 million full faith and credit State Board of Education public education capital outlay bonds in a competitive sale.

Thursday was the earliest date the bonds could be sold, according to a bid notice.

The state sells bonds on an 18-hour notice.

Port Authority of New York and New Jersey bonds

In upcoming deals, the Port Authority of New York and New Jersey plan to price $350 million consolidated bonds on March 15, according to a preliminary official statement released Thursday.

The series 150th bonds will be sold via competitive sale.

The bonds have serial maturities from 2013 through 2027.

Depfa First Albany Securities LLC in New York and Acacia Financial Group Inc. in Montclair, N.J., are the financial advisors.

Proceeds will be used to refund the port authority's series 7 versatile structure obligations.

North Dakota HFA sets pricing date

North Dakota Housing Finance Agency plans to price $56.565 million housing finance bonds on March 12, the issuer said Thursday.

Series 2008 C home mortgage finance program bonds (Aa1/VMIG 1) are short-term bonds that mature June 1, 2009, said Mike Anderson, executive director of the agency.

Citi is the underwriter of the negotiated sale.

Proceeds will be invested in a guaranteed interest account.

"Then, they will be remarketed into long-term bonds, which will be used for mortgage loans," Anderson said.

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