Market regains strength; Chicago Board of Education prices $547.34 million of G.O. bonds

By Sheri Kasprzak

New York, Sept. 10 - Municipals felt stronger on Thursday following an auction of long-term government debt that sent Treasuries upward, market insiders noted. Meanwhile, the Chicago Board of Education dominated a busy session for the primary with a $547.335 million sale of general obligation bonds.

"The market feels strong today since the [Treasury] auction is out of the way," said Anthony Shields, senior vice president with Grigsby & Associates.

Meanwhile, Shields said it is becoming harder to buy bonds in the secondary.

"From a trading perspective, it is becoming increasingly difficult to buy bonds in the secondary market," he said.

"The new issues are coming more and more as BABs leaving traditional tax exempts more and more scarce."

A trader said Thursday that the market had a definite firm tone.

"Treasuries look really strong today, and we're following them," said the trader.

"There's really not a lot moving [in the secondary]."

Looking at the Chicago Board of Education sale, the board sold $501.915 million in series 2009E unlimited tax G.O. Build America Bonds and $45.42 million in series 2009F tax-exempt unlimited tax G.O. bonds (A1//A+).

"The Chicago school deal went very well, but I don't think it was especially cheap," said Shields, responding to earlier concerns that the deal might go cheap since it's not a highly rated name.

"In fact, on the syndicate call, there was a great deal of trepidation about going through the +200 basis points level versus the 30-year. A number of accounts initially refused to go in, but did so after the book built up. At the end of the day, they had at least $1.3 billion in orders and were able to put it to +180 basis points, which is far tighter than expected."

The 2009E bonds are due 2017 to 2024 with term bonds due 2029 and 2039. The serials have coupons from 4.682% to 5.482%, all priced at par. The 2029 bonds have a 6.038% coupon, priced at par, and the 2039 bonds have a 6.138% coupon, also priced at par.

The 2009F bonds are due 2012 to 2016 with 2.5% and 5% coupons, respectively.

Merrill Lynch & Co. Inc. was the senior manager.

Proceeds will be used to fund capital improvements throughout the city's schools.

Texas Permanent Fund bonds price

Also on Thursday, the Board of Regents of the University of Texas priced $250 million in series 2009A Build America Bonds for the Texas Permanent University Fund, according to a pricing sheet.

The bonds (Aaa/AAA/AAA) are due 2039. The 5.262% bonds were priced at par.

Barclays Capital Inc. was the lead manager.

Proceeds will be used to refund all of the university fund's commercial paper notes.

North Carolina brings power bonds

In other pricings, the North Carolina Municipal Power Agency No. 1 priced $208.195 million in series 2009 Catawba Electric revenue bonds, according to a pricing sheet.

The sale included $198.995 million series 2009A refunding bonds, $9.2 million in series 2009B taxable refunding bonds and $68.65 million in series 2009D taxable Build America Bonds.

The bonds (A2/A/A) were sold through lead manager Morgan Stanley & Co. Inc.

The 2009A bonds are due 2021 to 2026 with a term bond due 2030. The 2009B bonds are due 2021 with a 5.482% coupon, priced at par. The 2009D bonds are due 2032 with a 6.184% coupon, also priced at par.

Proceeds will be used to refund existing debt and terminate a swap agreement.

Triborough Bridge prices bonds

Elsewhere, the Triborough Bridge and Tunnel Authority of New York priced $158 million in series 2009B general revenue Build America Bonds for MTA Bridges and Tunnels, according to a pricing sheet.

The bonds were sold through lead manager Goldman, Sachs & Co.

The bonds are due 2036 and 2039. The 2036 bonds have a 5.42% coupon, priced at par, and the 2039 bonds have a 5.5% coupon, also priced at par.

Proceeds will be used to fund miscellaneous capital projects for MTA Bridges and Tunnels.

Utah to sell $1.04 billion

In the coming week, the municipals primary takes off, led by the state of Utah, which is scheduled to price $1.041 billion in series 2009 Build America Bonds and G.O. bonds during the week of Sept. 14.

The sale includes $729.545 million in series 2009D taxable G.O. Build America Bonds and $311.715 million in series 2009C G.O. bonds. The 2009D bonds will be sold Wednesday, and the 2009C bonds will be sold on Tuesday.

The 2009D bonds are due 2018 and 2024, and the 2009C bonds are due 2010 to 2014.

Morgan Stanley is the lead manager for the bonds (Aaa/AAA/).

Proceeds will be used to fund highway improvements and improvements to higher educational facilities.

Missouri Highway sale planned

In other offerings, the Missouri Highways & Transportation Commission is scheduled to bring to market $600 million in series 2009 reimbursement state road fund bonds, according to a calendar of upcoming deals. The offering is one of several transportation sales expected during the week.

The offering includes $341.575 million in series 2009 federally taxable Build America Bonds and $258.425 million in series 2009 tax-exempt federal reimbursement state road fund bonds.

The bonds (Aa2/AA+/AA+) will be sold on a negotiated basis with Merrill Lynch.

Proceeds will be used to fund the state's bridge improvement program.

Another transportation offering comes from the Clark County Airport System in Nevada, which plans to price $484 million in series 2009 airport revenue bonds on Thursday, according to a calendar of upcoming sales.

The deal includes $300 million in series 2009A Build America Bonds and $184 million in series 2009B subordinate-lien revenue bonds.

The 2009A bonds (Aa2/AA/) are due 2040, and the 2009B bonds (Aa2/AAA/) are due 2013 to 2026.

Citigroup Global Markets Inc. is the senior manager.

Proceeds will be used to fund airport improvements.

The Central Puget Sound Regional Transit Authority is expected to bring to market $400 million in series 2009 sales tax and motor vehicle excise tax bonds Wednesday, according to a sales calendar.

The sale includes $300 million in series 2009P-1 bonds and series 2009P-2T Build America Bonds. The deal also includes $100 million in series 2009S-2T Build America Bonds.

Citigroup is the bookrunner for the 2009P-1 bonds, and Citi and Goldman, Sachs & Co. are the bookrunners for the 2009P-2T BABs. The co-managers are Merrill Lynch, RBC Capital Markets Corp. and Siebert Brandford Shank & Co. LLC.

Proceeds will be used to pay for or reimburse the authority for constructing, planning, designing or extending improvements to the authority's high-capacity transportation facilities.

Illinois competitive deal ahead

Also on the horizon, Illinois is expected to bring to market $400 million in series 2009A G.O. bonds, according to a notice of sale. The sale is scheduled for Wednesday.

The bonds will be sold on a competitive basis with First Southwest Co. as the financial adviser.

The bonds are due 2010 to2034.

Proceeds will be used for capital improvements, transportation and highway purposes, anti-pollution programs and coal and energy development programs.

Miami-Dade deal coming up

On Thursday, Miami-Dade County in Florida is scheduled to price $329.765 million in series 2009 transit system sales surtax revenue bonds, according to a preliminary official statement.

The offering includes $77.855 million in series 2009A tax-exempt bonds and $251.91 million in series 2009B Build America Bonds.

The bonds will be sold on a negotiated basis with Wells Fargo Securities Inc. as the senior manager.

The 2009A bonds are due 2010 to 2039 with term bonds, the maturities of which have not been set. The 2009B bonds are due 2010 to 2039, also with term bonds.

Proceeds will be used to fund transportation improvements, as well as public works projects.

Dallas-Fort Worth airport bonds on tap

In other upcoming deals, the cities of Dallas and Fort Worth in Texas plan to price $310 million in series 2009A international airport joint revenue refunding bonds on Thursday. A retail order period is scheduled for Wednesday.

The bonds will be sold through lead manager Siebert Brandford Shank & Co. LLC.

Proceeds will be used to refund existing debt used for airport system improvements.

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