Muni yields flatten; Washington sells $795.39 million; U of Texas details $644.01 million sale

By Sheri Kasprzak

New York, Sept. 15 - Municipal yields were largely unchanged on Wednesday as primary action continued to be fairly strong, a market insider reported.

"If you look hard enough, you might see portions of the curve a little better or a little worse, but we're really flat overall," he said.

"It's almost welcome, the way things have been going the past week or so."

Meanwhile, in primary action, the State of Washington came to market with $795.385 million in series 2011R general obligation bonds.

The timing might have been a little off for the issuer, said one sellsider familiar with the offering.

"If they had gone two weeks ago, it would have probably been better, but overall, it went well," he said.

"Yields have been edging up over the past week-and-a-half, but you just go with the market sometimes and get what you can."

The offering was comprised of $401.435 million in series 2011R-B various-purpose G.O. bonds and $393.95 million in series 2011R-C motor vehicle fuel tax G.O. refunding bonds.

The bonds (Aa1/AA+/AA+) were sold competitively with Wells Fargo Securities LLC winning the 2011R-B bonds and Bank of America Merrill Lynch winning the 2011R-C bonds.

The 2011R-B bonds are due 2011 and 2013 to 2027 with 4% to 5% coupons. The 2011R-C bonds are due 2011 to 2027 with 2% to 5% coupons.

Proceeds from the sale will be used to refund $335 million in debt for an estimated 10.6% net present value savings of refunded principal and to refund $352.9 million in debt for an estimated net present value savings of 11.7% of refunded principal.

U of Texas sells bonds

Deep in the heart of Texas, the University of Texas System priced Tuesday $644.095 million in series 2010 revenue financing system bonds (Aaa/AAA/AAA), said Terry Hull, finance director for the system.

The offering included $604.31 million in series 2010C Build America Bonds and $39.785 million in series 2010E tax-exempt refunding bonds.

"The pricing on the system's RFS bonds, series 2010C and E, went very well, and both series are scheduled to close on Sept. 23," Hull said in an interview Wednesday.

"The system executed the transaction at this time to capture attractive long-term financing rates."

The 2010C bonds are due 2018 to 2026 with term bonds due 2030 and 2046. The serial coupons range from 3.225% to 4.275%, all priced at par. The 2030 bonds have a 4.644% coupon, priced at par, and the 2046 bonds have a 4.794% coupon, also priced at par.

The 2010E bonds are due 2012 to 2018 with coupons from 2% to 5%.

J.P. Morgan Securities Inc. was the senior manager.

Proceeds will be used to refinance $21.3 million in tax-exempt commercial paper notes and fund capital improvement projects at the university's campuses.

The university system is based in Austin.

Jacksonville sells $84.3 million

Elsewhere, the City of Jacksonville, Fla., priced $84.3 million in series 2010A-1 special revenue bonds on Wednesday, said a term sheet. The sale was upsized from $51.69 million.

Additionally, the city decided the day before pricing to sell the bonds as tax-exempts rather than Build America Bonds, as originally planned, due to a saturation of the securities in the marketplace and some uncertainty about the future of Build America Bonds, said Mickey Miller, the city's finance director.

"Instead, we did a combination of amortizing tax-exempts and medium-term notes," he added.

The bonds (Aa2/AA-/AA) were priced in a limited competitive sale with Morgan Keegan & Co. Inc. winning the bid. The true interest cost came at 2.790029%, said Miller. The bidders were limited to members of the city's investment banking team.

The bonds are due 2012 to 2025 with 3.25% to 5% coupons.

"We had seven responses," Miller noted.

"We were getting responses from the market. We were within a few basis points of where our financial adviser [Public Financial Management Inc.] suggested. Yields had moved back up within the last week or 10 days. It's quite uncertain where the market is going."

Proceeds from the offering will be used to finance capital equipment and capital improvement costs.

Pennsylvania authority prices

Also on Wednesday, the Commonwealth Financing Authority of Pennsylvania sold $150 million in series 2010 revenue bonds, said a pricing sheet.

The offering included $39.68 million in series 2010C-1 tax-exempt bonds and $110.32 million in series 2010C-2 Build America Bonds.

The 2010C-1 bonds are due 2011 to 2025 with coupons from 2% to 5%. The 2010C-2 bonds are due 2030 and 2040. The 2030 bonds have a 5.587% coupon, priced at par, and the 2040 bonds have a 5.787% coupon, also priced at par.

Citigroup Global Markets Inc. was the senior manager.

Proceeds will be used to fund grants for water and sewer, flood control, pollution control and other projects.

S.D. airport deal planned

Looking out on the horizon, the San Diego County Regional Airport Authority plans to bring $417.82 million in series 2010 subordinated airport revenue bonds (A2/A/) during the week of Sept. 20, said a preliminary official statement.

The offering includes $257.74 million in series 2010A non-AMT bonds, $27.145 million in series 2010B non-AMT bonds and $132.935 million in series 2010C Build America Bonds.

Siebert Brandford Shank & Co. LLC and JPMorgan are the senior managers.

Proceeds will be used to finance capital improvements at San Diego International Airport and refund commercial paper notes.

The authority maintains and operates San Diego International Airport, develops a comprehensive plan and has authority to develop and construct a new airport in the county or a replacement for San Diego International Airport should the need arise.

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