Philadelphia brings $165 million in G.O. bonds; Cuyahoga County of Ohio sells $70 million in BANs

By Aaron Hochman-Zimmerman and Sheri Kasprzak

New York, Dec. 16 - Things were looking up for municipals Tuesday - the week's busiest pricing day - even as volume for the week continued to taper off.

Issuers in the market Tuesday said they found strong demand for their sales and most deals priced roughly in line with expectations.

Even in the troubled secondary market, traders said the tone of the market was slightly improved, thanks to a Federal Reserve rate cut.

Pricing action Tuesday was led by Philadelphia, which priced $165 million in series 2008B general obligation bonds (Baa1/BBB/BBB+), said Rebecca Rhynhart, the city's treasurer.

The issue was upsized from $100 million.

Morgan Stanley & Co. Inc. acted as the lead underwriter for the issue.

The bonds priced with maturities between 2009 and 2018 and yields between 3.5% and 7.2%.

There is an optional call on July 15, 2016 at par.

"Demand was definitely a lot stronger than we expected," Rhynhart said in an interview Tuesday.

Proceeds of the sale will be used to reimburse the city for capital projects.

Cuyahoga sells $70 million

Elsewhere, Cuyahoga County of Ohio brought $70 million in series 2008 G.O. capital improvement bond anticipation notes Tuesday, according to a pricing sheet released by the issuer.

The notes (/SP-1+/) were sold on a competitive basis with J.P. Morgan Securities Inc. winning the bid. The net interest cost came to 1.116%. The notes, which are due in December 2009, have a 2.5% coupon, priced at par.

Four bids were made in the offering, said the issuer.

Sudsina & Associates, LLC was the financial adviser for the sale.

Proceeds will be used for capital improvement projects throughout the county.

Florida University bonds price

Also priced on Tuesday was a $60 million offering of series 2008A improvement revenue bonds (Aa3/AA/AA) from the Florida University System Board of Governors, according to Chris Kinsley, the director of finance and facilities for the board.

Citigroup was the senior manager for the negotiated deal.

The serial bonds are due from 2009 to 2026 with yields from 2.5% to 6.1%. The offering also included term bonds due 2024 to 2033 with yields from 6% to 6.65%.

Kinsley previously told Prospect News he had been seeking yields around 6.3%.

Proceeds from the sale will be used to improve the campuses of the universities in the system.

Illinois sale

Also on Tuesday, the State of Illinois had been expected to price $1.4 billion in series 2008 G.O. certificates on a competitive basis.

Calls to the issuer for the details of the offering, which was pushed back from last week, were not immediately returned.

The certificates are due April 24, 2009; May 25, 2009; and June 24, 2009.

Proceeds will be used to meet variations between the disbursement of and the receipt of budgeted funds in 2009.

Christus deal ahead

Moving to upcoming offerings, Christus Health announced Tuesday its plans to price $398.975 million in series 2008 variable-rate revenue refunding bonds through the Tarrant County Cultural Education Facilities Finance Corp. in Texas and the Louisiana Public Facilities Authority.

The sale includes $268.56 million in series 2008C bonds sold through Tarrant County and $130.415 million in series 2008D bonds sold through Louisiana, said a preliminary official statement.

The offering is comprised of $50 million in series 2008C-1 bonds, $47.35 million in series 2008C-2 bonds, $50 million in series 2008C-3 bonds, $47.345 million in series 2008C-4 bonds and $73.865 million in series 2008C-5 bonds. The deal also includes $65.21 million in series 2008D-1 bonds and $65.205 million in series 2008D-2 bonds.

The 2008C-1 through 2008C-4 bonds are all due July 1, 2047, and the 2008C-5 bonds are due July 1, 2031. The 2008D-1 and 2008D-2 bonds are also due July 1, 2031.

The bonds will be sold on a negotiated basis with Citigroup Global Markets as the senior manager for the 2008C-1, 2008C-2 and 2008D-1 bonds; Merrill Lynch & Co. as the lead manager for the series 2008C-5 bonds; Banc of America Securities as the lead manager for the 2008C-3 and 2008C-4 bonds; and Goldman, Sachs & Co. as the lead manager for the 2008D-2 bonds.

Proceeds from the 2008C bonds will be used to refund the Harris County Health Facilities Development Corp.'s series 2005A revenue bonds and Tarrant County Cultural Education Facilities Finance's series 2007A and 2007B revenue bonds. The proceeds from the 2008D bonds will be used to refund the Louisiana Public Facilities Authority's series 2005C-2 revenue bonds.

Secondary looks better

Heading to the secondary market, traders said activity was still relatively light, but the tone of the market was somewhat improved, buoyed by the Federal Reserve's decision to slash interest rates to 0% to 0.25%.

"A few things are trading here and there," said one trader reached in the afternoon.

"It's looking better today. We're up a few basis points on news. The Fed cut rates, so that's helping us."

Looking to specific trades Tuesday, one trader said she saw some interest in the Triborough Bridge and Tunnel Authority of New York's series 2008 revenue bonds. The 5% 2020s were seen trading at 5.342%. The authority's 5% 2021s were trading at 5.24%.

Elsewhere, New York's 2008A bonds were trading with the 5% 2018s seen at 4.934%. The city's 2008D bonds were also in play with the 5.25% 2015s trading at 4.22%.

In other trades, the recently freed-to-trade Miami-Dade County in Florida's Building Better Communities G.O. bonds were seen in play. The 6% 2024s were trading at par.

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