Current market called 'difficult' by issuers; Citizens Property awaits good conditions to sell $1.5 billion

By Cristal Cody and Sheri Kasprzak

New York, April 30 - Despite a fraught market environment, issuers are still heading to the new deal arena en masse and one issuer told Prospect News Wednesday that the sour conditions won't stop it from selling bonds.

Catholic Healthcare West will offer more than $600 million in fixed-rate revenue bonds this week.

"While this is a challenging time in the fixed-income market, we believe our strong track record as a well as our very robust investor relations program is a differentiator that will work in our favor with investors," said Michael Blaszyk, the organization's executive vice president and chief financial officer.

The organization intends to price $524.95 million in uninsured fixed-rate revenue bonds and $90 million in insured fixed-rate revenue bonds Thursday, Blaszyk said.

The bonds (A2/A/A+) being sold include $226.25 million in series 2008A through 2008E bonds and $298.7 million in series 2008F through 2008K bonds, as well as $90 million in the insured bonds.

Citigroup Global Markets and JPMorgan are the lead managers for the negotiated deal.

Thursday's sale, Blaszyk said, will be followed up by a $750 million offering of variable-rate demand obligations backed by direct-pay letters of credit from Bank of America on May 15.

"These two offerings are part of CHW's careful strategy to broad diversification in managing both investment and debt portfolios," said Blaszyk.

Proceeds from the sale will be used to retire the healthcare facility's auction-rate bonds.

Citizens presses ahead

Florida's Citizens Property Insurance Corp. is also facing tough market conditions for its $1.5 billion in bonds, the issuer said in an investment and finance committee meeting held Wednesday.

Still, Jacksonville-based insurer is converting $4.5 million in auction-rate securities in the coming weeks.

"At this point, $2.1 billion at has been retired. Over the next two or three weeks, the rest of it will be retired," John Forney with Raymond James & Associates, the company's financial advisor, said during the teleconference.

"Everybody is trying to get through the same door which is issuing these auction-rate securities."

Citizens Property plans to price $1.5 billion series 2008A high-risk account senior secured bonds (A2//) next week if market conditions cooperate.

"It may be two weeks or two months before that transaction gets done," he said. "Everything that can be done has been done and we're just waiting for the right market conditions to execute that."

The committee approved underwriters for the negotiated sale, including Banc of America Securities, JPMorgan, Merrill Lynch & Co., SunTrust Robinson Humphrey and Wachovia Securities.

Northern California utility to restructure

In other market news, the Transmission Agency of Northern California is evaluating restructuring $1.1 billion revenue bonds, according to the agency.

The potential restructuring includes $95.775 million series 2003A, $958 million series 2003B and $44.525 million series 2003C project revenue bonds for California and Oregon.

"We're just getting a lot of bondholder calls," said Tim Ryan, assistant treasurer. "We're exploring our options."

Wisconsin Housing sells $65.825 million

Looking at Wednesday's pricing activity, the Wisconsin Housing and Economic Development Authority priced $65.825 million term bonds with 5.3% to 5.625% coupons on Wednesday, the issuer told Prospect News.

The authority only priced the fixed-rate portion of the series 2008A bonds, said Sherry Gerongale, treasury manager.

The series 2008A bonds also include $76.21 million that will price as variable rate demand bonds on May 15. The bonds are due Sept. 1, 2038.

The fixed-rate bonds include a 2023 term bond that priced with a 5.3% coupon, a 2028 term bond that priced with a 5.5% coupon and a 2031 term bond that priced with a 5.625% coupon.

The true interest cost and the yields will be determined after the remaining portion has priced, Gerongale said.

No ratings have been issued yet.

The authority also expects to price $38 million series 2008B variable rate demand bonds due Sept. 1, 2034 later in May, Gerongale said.

Merrill Lynch & Co. was the senior manager of the negotiated fixed-rate sale and will manage the sale of the variable-rate demand bonds.

Proceeds will be used to refund existing loans and to purchase new mortgage loans.

Virginia schools stays competitive

The Virginia Public School Authority priced $59.87 million school educational technology notes with a 2.879981% true interest cost in a competitive sale on Wednesday, the issuer told Prospect News.

The series VIII bonds (Aa1/AA+/AA+) priced with 4% to 5% coupons to yield 1.93% in 2009 to 3.05% in 2013, said Rick Davis, public finance manager.

Lehman Brothers was the successful bidder out of seven bidders, he said.

"We tend to do competitive sales," he said. "Unless it's something like a complicated refund, but we even do some refundings competitively."

Proceeds will be used to make grants to establish a computer-based instructional and testing system for the Standards of Learning program and to develop high speed internet access at high schools, middle schools and elementary schools.

California agencies price two bonds

Moving to the west coast, the California Department of Water Resources priced $279.25 million power supply revenue bonds with a 4.183% true interest cost, according to pricing terms released Wednesday.

The series 2008K bonds (/AAA/A+) priced to yield 4.1% on the two tranches.

The bonds are due May 1, 2018.

The $25.975 million principal amount piece priced with a 4% coupon and the $253.275 million principal amount piece priced with a 5% coupon.

JPMorgan was the senior manager of the negotiated sale.

Proceeds will be used to redeem the series 2005G-13 and 2005G-14 variable rate demand bonds.

Also out of the Golden State, the California Housing Finance Agency priced $300 million bonds on Wednesday, but details were still being finalized at press time, a source said.

The $75.035 million series 2008J (Aaa/AAA/) and $224.965 million series 2008K bonds (Aa2/AA-/-) are insured by Financial Security Assurance.

The series 2008J bonds have maturities from 2009 through 2018. The series 2008K bonds are term bonds due in 2023, 2028, 2033, 2038 and 2043.

Banc of America Securities LLC is the senior manager and Citigroup Global Markets, Merrill Lynch & Co., Goldman, Sachs & Co., Bear, Stearns & Co., Fidelity Capital Markets Services and Wachovia Securities, NA are co-managers.

Proceeds will be used to make or purchase mortgage loans or mortgage-backed securities.

Elsewhere, the Texas Children's Hospital priced $300 million variable-rate health care revenue bonds with 2.1% to 2.65% initial rates on Wednesday, the issuer told Prospect News.

"A lot was coming to the market, so I think there was a little pressure for interest rates, but we felt good on the bonds coming out today," said Robert Kenderdine, the hospital's comptroller. "We got good coverage of bonds from the buyer and that's what we were really shooting for."

The series 2008-1 bonds priced with a 2.55% initial rate, the series 2008-2 bonds priced with a 2.65% initial rate and the series 2008-3 bonds priced with a 2.1% initial rate, he said.

The series 2008-3 bonds are due May 1, 2009. The other series have 34-year maturities due 2041.

The bonds (Aa2) priced through the Harris County Health Facilities Development Corp.

JPMorgan Securities was the manager of the negotiated sale.

Proceeds will be used to refund the hospital's series 2007-1, 2007-2 and 2007-3 auction-rate bonds.

University of Miami prices bonds

In other pricing news, the University of Miami priced $347 million in series 2008 revenue bonds Wednesday, a source at the issuer said. The pricing terms, she said, were not immediately available.

The bonds (A2/A-/) were sold on a negotiated basis with Morgan Stanley as the lead manager.

The offering includes $307 million in series 2008A bonds and $40 million in series 2008B bonds.

The university intends to use the proceeds to finance or refinance the purchase price of the Cedars Medical Center and renovations to the hospital.

Colorado authority to sell $210 million

Moving to upcoming bond sales, the Lower Colorado River Authority in Texas expects to price $210 million electric refunding and improvement revenue bonds on May 13, the issuer said Wednesday.

The series 2008 bonds (A1//) will be sold in a negotiated sale with Morgan Stanley as the senior bookrunner, said Janet Holland, funds manager.

A preliminary official statement is expected to be released on May 5, she said.

Proceeds will be used to refund a portion of the authority's outstanding series A tax-exempt commercial paper notes.

The Rhode Island Health and Educational Building Corp. plans to price $92.27 million public schools revenue bonds, according to a preliminary official statement.

The series 2008A bonds have serial maturities from 2009 through 2029.

The bonds are a pooled issue that includes the Bristol Warren Regional School District, the Foster-Glocester Regional School District and the towns of Cumberland, North Smithfield and Portsmouth.

The bonds are insured by Financial Security Assurance.

Merrill Lynch & Co. is the senior manager.

Proceeds will be used to finance projects in the schools and towns.

Children's Hospital to price $90.765 million

In other news, the Children's Hospital and Regional Medical Center plans to price $90.765 million revenue bonds through the Washington Health Care Facilities Authority, according to a preliminary official statement.

The series 2008C bonds (Aa3//) will be used to repay a taxable line of credit.

Goldman, Sachs & Co. is the senior manager.

The center also plans convert and remarket $72.48 million series 2008A revenue bonds and $76.06 million series 2008B revenue bonds.

Proceeds from those bonds will be used to refund the hospital's series 2006A and 2006B bonds.

Riverside, Calif., plans to price $208.12 million electric revenue bonds, according to a preliminary official statement.

The series 2008D bonds (/AAA/AAA) have maturities from 2017 through 2028 with term bonds due 2033 and 2038.

The bonds are insured by Financial Security Assurance and the proceeds will be used to finance capital costs for the electric system.

Merrill Lynch & Co. is the senior manager of the negotiated sale.

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