Pennsylvania sells $950 million of G.O. bonds with low all-in cost; market digests muni deals

By Cristal Cody

Tupelo, Miss., April 3 - The Commonwealth of Pennsylvania brought the municipal bond market's biggest deal of the day on Wednesday with a $950 million offering of general obligation bonds among a smattering of smaller bond deals, according to market sources.

"The market was healthy," one source said.

Pennsylvania priced the notes with a true interest cost of 2.905% from winning bidder BofA Merrill Lynch, one of six bidders in the competitive sale, a market source said.

"It was very well received," the source said. "The all-in cost was near or at the lowest level the commonwealth has ever received on G.O. bonds. A lot of the bonds pre-sold - that's why the bids were so aggressive."

In some of the smaller deals of the day, Montgomery County, Pa., raised $55 million through an offering of series 2013 G.O. bonds in a competitive sale that attracted 10 bidders, according to a source. PNC Capital Markets, LLC was the winning bidder with a 2.393% TIC.

"Getting 10 bidders and getting the TIC below 2.40%, they were really happy with that," the source said.

The market also digested a $56.68 million sale of series 2013 G.O. public improvement bonds from the City of Virginia Beach, Va. The city priced two tranches of the bonds (Aaa/AAA/AAA) competitively. Citigroup Global Markets Inc. was the winning bidder with a 2.357% TIC.

"We had six bidders, and we all felt like we got a very good rate," said Patricia Phillips, director of finance for the city.

The primary pipeline is filling up for April with several bond offerings expected next week, including new deals on tap by the State of Michigan, the Washington Suburban Sanitary District and Wake County, North Carolina.

Pennsylvania sells $950 million

In the primary market, Pennsylvania sold $950 million of the G.O. bonds (Aa2//AA+) with 1% to 5% coupons to yield 0.17% to 3.34%, according to a market source.

The first series of 2013 bonds have serial maturities from 2014 through 2033.

BofA Merrill Lynch was the winning bidder out of six bidders in the competitive sale with a TIC of 2.905%.

Public Financial Management Inc. was the financial adviser.

Proceeds will be used to construct, acquire and rehabilitate capital facilities projects and for loans for water supply, storm water control and sewage treatment system projects, farmland preservation, watershed preservation, abandoned mine reclamation, acid mine drainage remediation and other environmental initiatives.

Washington Suburban Sanitary District readies for deal

Looking ahead, Washington Suburban Sanitary District expects to price $247,035,000 of bonds (Aaa/AAA/AAA) for Montgomery County and Prince George's County in Maryland competitively on Tuesday, according to a preliminary official statement.

The sale includes $150 million of series 2013 consolidated public improvement bonds due 2014 through 2032 and $97,035,000 of series 2013 consolidated public improvement refunding bonds due 2014 through 2026.

Public Advisory Consultants, Inc. is the financial adviser.

Proceeds will be used to fund the construction or reconstruction of water supply facilities and supply lines and sewage disposal facilities and to refund certain maturities from the series 2003 general construction refunding bonds, series 2003 water supply refunding bonds, series 2003 sewage disposal refunding bonds, series 2006 water supply bonds and series 2006 sewage disposal bonds.

Wake County plans bond sale

Also on Tuesday's deal calendar, North Carolina's Wake County expects to price $176,415,000 of G.O. school loan bonds (Aaa/AAA/AAA) through a competitive sale, according to a preliminary official statement.

The deal includes $51,165,000 of series 2013A G.O. school bonds and $125.25 million of series 2013B G.O. public improvement bonds.

Waters and Co., LLC is the financial adviser.

The series 2013A bonds have serial maturities from 2014 through 2032, and the series 2013B bonds are due 2014 through 2032.

Proceeds will be used to finance the costs to acquire, construct, expand and renovate school facilities in the county.

Michigan to bring G.O. bonds

Michigan plans to price $200 million of G.O. school loan bonds through a competitive sale on April 10, according to a preliminary official statement and notice of sale.

The series 2013A taxable bonds (Aa2/AA-/AA) are due 2024 through 2033.

Robert W. Baird & Co. Inc. is the financial adviser.

Proceeds will be used to make loans to school districts.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.