Utah Transit brings $199.73 million in BABs; market firms upon pricing of Build America Bonds

By Aaron Hochman-Zimmerman and Sheri Kasprzak

New York, May 13 - Municipals saw slight improvement on Wednesday on new Build America Bonds in the primary market, said market insiders.

"We're a bit firmer," noted one trader reached in the afternoon.

"There were some BABs in the market today, and it seems like every time they price, secondary does feel firmer."

Among the Build America Bonds priced Wednesday was $199.73 million in series 2009B Build America Bonds from the Utah Transit Authority, said a sellside source.

The bonds (Aa3//AA) are due 2039 and have a 5.937% coupon to yield 5.930%.

Proceeds will be used to expand the state's commuter rail project, construct new light rail extensions and finance system-wide improvements.

Despite the firmer tone, the market dragged through another slow day as the flow of supply was merely a trickle.

"We were sitting here unsure of what move to make," a senior trader said.

"It's slow right now; we don't see a lot of supply," he said. "We are trying to make our living doing a bunch of smaller pieces."

Still, "we would expect that rates would stay pretty tight for a while because of supply," he said.

If larger issues appear, there will likely be accounts to welcome them.

"There's a lot of money out there," he said. "It's a matter of rate, which is pretty basic to say."

"For the right name, for the right rates, people will step up and buy it, right now," he said.

The slowdown in the rally has caught some investors off guard.

"Whenever a correction happens, it happens so fast and so furiously it's hard to get out of the way," he said, "and it's hard to get in when you want to."

California Statewide

Moving to upcoming sales, California Statewide Communities Development Authority is looking to price $1.6 billion in series 2009 revenue bonds for Kaiser Permanente, said a preliminary official statement.

The sale includes $750 million in series 2009A bonds and $850 million in series B through E bonds. The exact breakdown of the series B through E bonds has not been determined.

The maturities have not been set.

Citigroup Global Markets Inc. and J.P. Morgan Securities Inc. are the lead managers. The co-manager is Goldman, Sachs & Co.

Proceeds will be used to renovate, construct, acquire and equip Kaiser Permanente hospitals as well as reimburse the non-profit for equipment acquisitions and capital expenses.

Kaiser Permanente is based in Oakland, Calif.

Newport Beach

Newport Beach, Calif., plans to offer $217.35 million in series 2009A through E revenue bonds on behalf of Hoag Memorial Hospital Presbyterian, according to city treasurer Dennis Danner.

The city will sell $67.35 million of the series 2009A bonds and $37.50 million each of the series 2009B through E bonds.

Citigroup and JPMorgan will act as underwriters for the negotiated deal.

Proceeds will be used to refund outstanding debt as well as replace and maintain hospital facilities.

Indianapolis sale ahead

Elsewhere, the Indianapolis Local Public Improvement Bond Bank plans to sell $166.075 million in series 2009E through H notes, said a preliminary official statement.

The notes will be sold on a negotiated basis with City Securities Corp. as the senior manager.

The deal includes 2009E, 2009F-1, 2009F-2, 2009G, 2009H-1 and 2009H-2 bonds.

Proceeds will be used to pay for expenses incurred before the collection of ad valorem taxes.

MEAG to sell

Also coming up, the Municipal Electric Authority of Georgia is scheduled to price $107.945 million in series 2009 bond anticipation notes, said a preliminary official statement released Wednesday.

The sale includes $53.285 million in series 2009A Plant Vogtle Additional Units PPA-2 project BANs and $54.66 million in series 2009B Plant Vogtle Additional PPA2 project BANs.

The notes will be sold on a negotiated basis with Citigroup and Morgan Stanley & Co. Inc. as the senior managers.

The notes are due in 2010.

Proceeds will be used to finance the authority's PPA-2 project, the output and services of which are sold to PowerSouth Energy Cooperative and 39 of MEAG's affiliates.

Secondary firms

Even though traders said volume was relatively light in the secondary market Wednesday, some trades were accomplished.

The State of Georgia's series 2009D bonds were seen moving. The 3.25% 2021 bonds were seen at 3.215%.

In other trades, the City of Whittier, Calif., saw its series 2009D Presbyterian Intercommunity Hospital bonds in action. The 4.25% 2014 bonds were seen trading at par Wednesday. The bonds priced at 4.5%. The 5% 2017s were seen at 4.73% after pricing at 5.1%.

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