Florida Board of Education leads active day of pricings; Stockton Unified School District, Calif., sells $65 million

By Cristal Cody and Sheri Kasprzak

New York, May 6 - In a day filled with pricing activities, Florida's State Board of Education led the action, selling $200 million in lottery revenue bonds, the issuer told Prospect News Tuesday.

Elsewhere, market conditions seem to be firming up, a sell-side source said.

"More issuers seem to be comfortable with the conditions," he said.

"The past few weeks have been rough, but the market does seem to be improving. It's something we keep an eye on and things change day to day. Some days are just better than others for pricing. If you have a bad day and an issuer decides to postpone a sale, I don't think it's necessarily an indicator that the market over the long term is bad. It just means you had a bad day."

Moving back to the Florida bonds sold Tuesday, the series 2008A bonds are due 2009 to 2027 with 5% coupons and yields from 2.15% to 4.89%, said Carol Bagley, bond development supervisor for the state's bond finance division.

Merrill Lynch & Co. was the successful bidder in the competitive sale.

Proceeds will be used for school construction and for the renovation of schools.

Also on Tuesday, the Stockton Unified School District in California priced $65 million in series 2008A general obligation bonds, a sell-side source told Prospect News.

Morgan Stanley won the competitive bid with a 4.538494% true interest cost.

The bonds are due from 2009 to 2029 with a term bond due 2032. The coupons on the serial bonds range from 4% to 5% with yields from 2% to 4.7%. The 2032 bonds have a 4.75% coupon, priced at par.

Proceeds will be used for capital improvement projects.

New York, Nature Conservancy bonds price

In other pricing news, the New York State Environmental Facilities Corp. priced $481.565 million in series 2008 state clean water and drinking water revolving funds revenue bonds, a source familiar with the sale confirmed. The full terms were not immediately available Tuesday.

The bonds (Aa1/AA/AA+) were sold on a negotiated basis with Depfa First Albany Securities as the lead manager.

The bonds are due 2009 to 2037.

Proceeds will be used to provide financial assistance to the New York City Municipal Water Authority to refinance water pollution control and drinking water projects.

Elsewhere, the Nature Conservancy of Colorado sold $100 million in bonds Tuesday, though the pricing terms will not be available until Wednesday, the issuer told Prospect News.

The bonds (Aa2/P-1//) were sold through lead manager Morgan Stanley.

Proceeds will be used to refinance a taxable line of credit from Bank of America.

Lower Colorado River Authority bonds to price

Moving to upcoming offerings, the Lower Colorado River Authority in Texas plans to price $166.4 million transmission contract refunding revenue bonds on May 13, a sell-side source said Tuesday.

The series 2008 bonds (A2/A/A+) will price for the LCRA Transmission Services Corp., an affiliate of the authority.

The bonds have serial maturities from 2009 through 2018 and term bonds due in 2023, 2028 and 2035.

Morgan Stanley is the senior manager of the negotiated sale.

Proceeds will be used to refund $108.6 million contract revenue commercial paper notes and $50 million series B notes.

The bonds will price simultaneously with the authority's $201.475 million series 2008 refunding revenue bonds.

The bonds (A1//) have serial maturities from 2009 through 2018 and term bonds due in 2023, 2028 and 2037.

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

The Louisville & Jefferson County Metropolitan Sewer District in Kentucky expects to price $105 million sewer and drainage system revenue bonds later in May, the issuer said Tuesday.

The series 2008A fixed-rate bonds (A2//) will price in a competitive sale on May 15 or the following week, finance director Marion Gee said.

"Basically we're looking to generate out of the issue $100 million," he said. "Depending on market conditions, we could see a premium. We'll work with the bidder at that time if there is a premium to get it down to what we deem acceptable."

First American Municipals Inc. is the district's financial adviser.

Proceeds will be used to fund the district's 2009 capital program, which includes expansion, rehabilitation, water quality and drainage projects.

Gundersen bonds to price

Also coming up, Gundersen Lutheran Health System in Wisconsin intends to price $89.3 million revenue and refunding bonds on May 28, the issuer said Tuesday.

The series 2008A and B variable-rate demand note bonds (A1//) will price through the Wisconsin Health and Educational Facilities Authority.

"The price will have some variability with the market. We're hoping to come in at or below Sifma," treasury manager Barbara Mussman said.

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

Proceeds will be used to refund a line of credit that was issued in April to redeem the $89.4 million series 2006A and B bonds.

Gundersen also plans to convert the $77.8 million series 2003B and C bonds from an auction rate to weekly variable-rate demand obligation notes on May 28.

Gundersen entered into four floating-to-fixed interest rate swaps, with a total notional amount of $179 million, on the series 2000B, series 2003B, series 2003C and series 2006B bonds.

The series 2006B swap will become a swap for the series 2008 bonds, Mussman said. Gundersen plans to keep the swaps in place after the conversion of the series 2003B and C bonds and sale of the series 2008A and B bonds.

Under the terms of the swaps, Gundersen pays fixed rates ranging between 3.26% and 3.79% and receives 67% of one-month Libor index.

Next week, the Kansas Department of Transportation expects to price $150.87 million revenue bonds on May 14, said Bruce Burditt, chief of the department's financial and investment management office.

The series 2008 adjustable tender highway revenue bonds (Aa2//AA) initially will price with a weekly interest rate.

The sale includes $23 million series 2008A-1 bonds, $38.9 million series 2008A-2 bonds, $595,000 series 2008A-3 bonds, $50.275 million series 2008A-4 bonds and $38.1 million series 2008A-5 bonds.

Wachovia Bank is the senior manager for the series 2008A-1, 2008A-2, 2008A-5 bonds, and Merrill Lynch & Co. is the senior manager for the series 2008A-3 and 2008A-4 bonds.

Proceeds will be used to make capital improvements for the department's highway projects.

Pennsylvania housing bonds ahead

In other upcoming sales, the Pennsylvania Housing Finance Agency plans to price $150 million in series 2008-102 single-family mortgage revenue bonds, according to a preliminary official statement.

The bonds include $94.33 million in series 2008-102A bonds, $16.67 million in series 2008-102B bonds and $39 million in series 2008-102C bonds.

The 102C bonds initially bear interest at the weekly rate.

The series 102A bonds are due from 2009 to 2018 with term bonds due 2023, 2028, 2033 and 2034. The 102B bonds are due 2011 to 2017, and the 102C bonds are due 2038.

The bonds will be sold on a negotiated basis with Merrill Lynch as the senior manager. Merrill Lynch is the sole underwriter for the 2008-102C bonds.

The pricing date could not be determined by press time Tuesday.

Proceeds will be used to purchase new home mortgage loans for the single-family program and to make a deposit to the capital reserve fund.

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