New York State Thruway sells $700 million in BANs at 2%; California bond market improves

By Aaron Hochman-Zimmerman and Sheri Kasprzak

New York, July 8 - Primary market action picked up on Wednesday, with the New York State Thruway Authority leading the activity. Meanwhile, conditions on the West Coast improved, market insiders said, with California bonds trading better.

The New York State Thruway sold $700 million in series 2009A general revenue bond anticipation notes Wednesday at 2%, priced at par, said Anthony Shields, senior vice president with Grigsby & Associates.

The notes are due July 14, 2011.

Citigroup Global Markets Inc. and M.R. Beal & Co. were the senior managers.

Proceeds will fund the authority's multiyear plan and make a deposit to a maintenance service fund.

In reoffering news, Shields said he saw the thruway notes take a hit. The notes were bumped to 185 basis points over Treasuries, he said.

Cal bonds seen better

In California, the state's bonds were seen a bit better on Wednesday despite budget troubles. Even so, Shields noted that the bond market in general had a better tone, and this may have contributed to the better feeling about California.

Shields said he could have bought general obligation bonds due 2038 at 6% on Tuesday, "but not today."

The volume was surprising, he said, as "the trains are kind of empty, the parking lots are empty."

The broader market saw "very good order flow," Shields said.

"There were a lot of new issues," he said considering the time of year, which still feels "holiday-like."

Another trader reached during the day said he was also impressed by Wednesday's volume in secondary.

"It's been stronger than usual," he noted.

"We've gone through a longer slump than I can remember, so to say things are picking up today is saying a lot. We're seeing some interest in California [bonds]."

Meanwhile, the deal of the week will come out of Los Angeles Thursday. The city plans to price $1.039 billion in series 2009 tax and revenue anticipation notes. Goldman, Sachs & Co. is the senior manager.

Santa Clara prices $177 million

Also in primary Wednesday, Santa Clara County, Calif., priced $177 million in series 2009-2010 tax and revenue anticipation notes (MIG 1/SP-1+/) at a 0.45602% true interest cost, according to county bond and investment analyst Paul Knofler.

"We were very pleased with the results," Knofler said.

Morgan Stanley & Co. Inc. outbid five other bidders for the competitive bonds, which carry a coupon of 2% and mature on June 30, 2010. KKN Public Finance acted as financial adviser.

Proceeds will be used to pay for general expenses ahead of collection of taxes and revenue.

The county seat is San Jose, Calif.

Water Infrastructure sale

Also out West, the Water Infrastructure and Finance Authority of Arizona sold $147.615 million in series 2009A water quality revenue refunding bonds Wednesday, said a sellside source connected to the deal.

The bonds are due 2010 to 2029 with coupons from 2.5% to 5% and yields from 0.34% to 4.47%. The all-in TIC came in at 3.959%.

Morgan Stanley was the senior manager.

Proceeds will be used to refund existing debt for the authority.

Dasny's Rochester deal

Moving to another Empire State deal, the Dormitory Authority of the State of New York priced Wednesday $116.484 million in series 2009 revenue bonds for the University of Rochester, said Marc Violette, spokesman for the authority.

The sale includes $54.704 million in series 2009A bonds, $34.37 million in series 2009B bonds, $10.675 million in series 2009C bonds, $3.615 million in series 2009D bonds and $13.12 million in series 2009E bonds.

The bonds (Aa3/A+/) were sold through senior manager Barclays Capital Corp.

The series 2009A bonds are due 2020 to 2029 with term bonds due 2032 and 2039. The serials have coupons from 4% to 5% and yields from 4.09% to 4.93%. The 2032 bonds have a 5% coupon to yield 5.05%, and the 2039 bonds have a 5.125% coupon to yield 5.17%.

The 2009B bonds are due 2011 to 2027 with 5% coupons and yields from 1.42% to 4.83%. The 2009C bonds are due 2011 to 2026 with coupons from 3% to 5% and yields from 1.42% to 4.74%, and the 2009D bonds are due 2011 to 2013 with 5% coupons and yields from 1.42% to 2.24%. The 2009E bonds are due 2011 to 2026 with coupons from 3% to 5% and yields from 1.42% to 4.83%.

Proceeds will be used to construct improvements to the university and refund its series 1997A, 1998A and 2000A bonds.

Palm Beach water bonds

Elsewhere, Palm Beach County, Fla., priced $68.115 million in series 2009 water and sewer G.O. bonds (Aaa/AAA/AAA) at an all-in TIC of 4.85%, according to John Long, county debt manager.

The sale was "outstanding," Long said as the county saw huge demand.

"We were oversubscribed in every maturity," he said.

The timing of the long-term planning worked in the county's favor, Long said, but the county took advantage of the slow calendar "once we started looking last Friday."

"There wasn't much in the market this week," he said, particularly of tax-exempt bonds.

The bonds carry serial maturities from 2011 to 2024 with term bonds due 2033, 2039 and 2040.

Wachovia Bank NA acted as the lead underwriter for the negotiated bonds.

Proceeds will be used to construct, expand, acquire and extend the county's water and sewer system.

The Palm Beach County seat is West Palm Beach, Fla.

Colorado TRANs

Looking a little further out in the calendar, the State of Colorado plans to sell $650 million in series 2009A general fund tax and revenue anticipation notes on July 14, said a preliminary official statement.

The notes (MIG 1/SP-1+/) will be sold on a competitive basis with Stifel, Nicolaus & Co. LLC as the financial adviser.

The notes are due June 25, 2010.

Proceeds will be used to fund anticipated cash flow shortfalls for the 2009-2010 fiscal year.

Also coming up, the Illinois Municipal Electric Agency is expected to price $333 million in series 2009 power supply revenue bonds, said a preliminary official statement.

The deal includes series 2009A tax-exempt bonds, series 2009B taxable bonds and series 2009C taxable Build America Bonds, but the exact breakdown has not yet been determined.

The bonds will be sold through senior manager J.P. Morgan Securities Inc.

The maturities have not been set.

Proceeds will be used to acquire an undivided interest in Prairie State, a coal-fired, steam-electric generating station.

Louisiana hospital bonds

The Louisiana Public Facilities Authority will offer $150 million series 2009A hospital revenue bonds (A2/A+/), according to a preliminary offering statement.

The bonds will be divided into a $136.025 million term bond due July 1, 2039 and a $13.975 million term bond due July 1, 2029.

JPMorgan, Merrill Lynch Banc of America Securities LLC and Morgan Stanley will act as underwriters for the negotiated deal.

Proceeds from the sale will be used to finance the refurbishing and re-equipping of the Lady of Lourdes Regional Medical Center in Lafayette, La.

Emory deal scheduled

In other bonds set for the week of July 13, the Private Colleges and Universities Authority of Georgia is set to sell $98.045 million in series 2009C revenue bonds on behalf of Emory University. Pricing is expected for July 16, according to a sales calendar.

The bonds (Aa2/AA/) will be sold through lead manager Merrill Lynch & Co. Inc.

Proceeds will refund the university's series 2008A bonds, which were used to finance or refinance capital projects at the Atlanta-based university.

Secondary firms

Market insiders said Wednesday's secondary market felt firmer. Trading volume also improved, marking the first time in several sessions that volume was steady.

Among the bonds trading, certificates of participation issued by Cabarrus County, N.C., were seen in action. The 4.75% 2027 bonds were seen at 4.631%.

Also out of North Carolina, Charlotte's COPs were seen moving. The 5% 2027s were seen at 4.556%.

In other trading news, the Palm Springs, Calif., community redevelopment refunding bonds were moving. The 5% 2014 bonds were trading at 5.913%.

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