Market for municipals still healthy, sell-sider says; Cobb County prices $87 million G.O.s

By Cristal Cody and Sheri Kasprzak

New York, March 25 - Tuesday kicked off what is shaping up to be a busy week for pricings in the municipal market.

Despite the crunch in the auction-rate market, a sell-sider told Prospect News Tuesday that there's still plenty of interest in municipals and issuers are still very eager to sell.

"There is pretty much always a market for munis," said the financial advisor source.

"We are seeing fewer and fewer auction-rate bonds, but that's obvious. There is still a good market out there for fixed-rate bonds and we're seeing a lot of our clients who are hoping to get out there with some offerings."

Heading up a busy day of pricings Tuesday was Cobb County in Georgia, which priced $87 million in general obligation tax anticipation notes with a true interest cost of 1.550899%, according to the issuer.

The notes (MIG1/SP1+/F1+) are due Dec. 31, 2008 and have a 2.25% coupon to yield 1.55%, said John Bergey, the county's treasury division manager.

Banc of America Securities was the successful bidder in the competitive sale.

Seven underwriters submitted bids in the sale, he said.

"We've had yields below 1% already so we were really pleased with the bids. It was very competitive. The top three bidders were all within about $4,000 of each other," he said.

Proceeds will supply cash flow needs for the county's general and fire district funds until property taxes are paid in September through December.

Also on Tuesday, the Metropolitan Water District of Southern California priced $501.5 million water revenue refunding bonds with a 1.85% initial rate on Monday, a source told Prospect News.

The interest rate for the $250.9 million series 2008A-1 and $250.6 million series 2008A-2 bonds (Aa2/AAA/AA+) will reset weekly.

Bank of America managed the series A-1 bonds and Citibank managed the series A-2 bonds.

Proceeds will be used to refund the district's outstanding auction rate bonds.

Full calendar shows market health

If the upcoming calendar of sales is any indicator of muni market health, the market is booming. In the coming week alone, there are dozens of sales scheduled.

The Dallas Forth Worth International Airport is gearing up to price $337.075 million in bonds Wednesday on a negotiated basis. The full details of the offering were not immediately available Tuesday.

The Hackensack University Medical Center plans to price $241.285 million in bonds on Wednesday. Those bonds will also be sold on a negotiated basis.

The Community Unit School District No. 5 in McLean and Woodford counties of Illinois plans to price $81.855 million general obligation school bonds on Thursday, a source said Tuesday.

The series 2008 bonds (Aaa/AAA/) have maturities from 2009-2015, 2017-2018 and 2020-2023.

The bonds are insured by Financial Security Assurance.

First Midstate Inc. and Wachovia Securities are the underwriters.

Proceeds will be used to build a new junior high school and two elementary schools and improve other school buildings, as well as refund a portion of the district's outstanding series 1997 and 1998 general obligation bonds.

The Development Authority of Richmond County in Georgia plans to price $135 million revenue bonds, according to a preliminary official statement released Tuesday.

MCG Health bonds to price

The $85 million series 2008A bonds (Aaa/AA/) and $50 million series 2008B bonds (Aa1/A+/-) will price for MCG Health through the Richmond County Development Authority.

The bonds will bear a weekly interest rate.

UBS Investment Bank is the underwriter.

Proceeds will be loaned to MCGHealth to finance the costs of acquisition and construction on the health care group's Augusta, Ga., medical campus.

No additional information was available by press time Tuesday.

Advocate Health Care Network in Illinois also plans to price $152.475 million variable-rate bonds on Thursday, a source told Prospect News Tuesday.

Moody's Investors Service had reported the bonds would price April 1.

The series 2008A bonds (Aa3/VMIG 1) will be sold through the Illinois Finance Authority.

Citigroup Global Markets is the underwriter.

The proceeds will be used to refund Advocate's auction-rate bonds, including the series 2005A and 2005B bonds and the series 2007A and 2007B bonds.

Auction rate conversion delay

In other news, the Baptist Medical Center in Florida postponed converting $175.65 million auction-rate bonds for a second time.

The medical center said in a notice released Tuesday that the planned conversion for Thursday has been postponed. The center also delayed converting the bonds last week.

The conversion includes $35 million series 2007B hospital revenue bonds; and $50 million series 2007C, $50 million series 2007D and $25.65 million series 2007E hospital revenue refunding bonds.

The bonds priced through the Jacksonville Health Facilities Authority.

The medical center had postponed last week's conversion because fixed rates were too high, Mike Lukaszewski, chief financial officer, said in an earlier interview.

"It's all dependent upon the interest rates in the fixed-income market. We don't want to keep them, but we need to make a wise decision on the timing and not buy into a market where rates will be higher two weeks from now," he said.

In other conversion news, the Sarasota County Public Hospital District in Florida said it will convert $82.95 million in series 2007A variable-rate bonds on March 26.

The bonds (A2/A/) are due 2037 and will be converted to a daily rate mode from an auction-rate mode.

Wachovia Bank is the remarketing agent.

The Vernon Natural Gas Financing Authority in California plans to convert $190.05 million in series 2006A bonds, according to a conversion notice released Tuesday.

The authority plans to convert the bonds to a long-term mode from an auction-rate mode.

The bonds to be converted include $47.5 million in series 2006A-1 bonds, $47.5 million in series 2006A-2 bonds, $47.55 million in series 2006A-3 bonds and $47.5 million in series 2006A-4 bonds.

Citigroup Global Markets is the remarketing agent.

Energy Northwest bonds expected to price

On Tuesday, Energy Northwest in Washington was expected to price $697.17 million bonds on Tuesday.

The sale (Aaa/AA-/AA-) will be in seven tranches of revenue refunding bonds and revenue bonds.

Goldman, Sachs & Co. is the senior manager.

Proceeds will be used to refund prior lien bonds and electric revenue bonds and capital improvements at Columbia Generating Station, a nuclear power station.

City of Industry, Calif., also was expected to price $81.455 million sales tax revenue bonds on Tuesday.

The series 2008 sales tax revenue bonds (A1) will be sold in a competitive sale, said Phyllis Tucker, city treasurer.

Proceeds will be loaned to the City of Industry Urban Development Agency for redevelopment projects in the city.

Oklahoma City was expected to price $67.56 million series 2008 general obligation and limited tax general obligation bonds in a competitive sale.

The bonds were planned to price as $60.56 million series 2008 general obligation bonds and $7 million series 2008 limited tax general obligation bonds.

The bonds are due 2010 to 2028.

Proceeds will be used for street, bridge and traffic-control systems, drainage control, park and recreational facilities, fire facilities, police facilities, transit facilities and economic development.

Orange Regional Medical Center and the Dormitory Authority of the state of New York also were expected to price $260 million series 2008 bonds.

Merrill Lynch & Co. is the senior manager.

Proceeds will be used for the construction of a 374-bed replacement hospital.

The Greater Orlando Aviation Authority was set to price $268.435 million in airport facilities refunding revenue bonds Tuesday, but calls to the authority for the terms were not returned by press time.

The 2008A bonds are due from 2008 to 2018 and the 2008B bonds are due from 2008 to 2018.

The Chicago Transit Authority also had a sale slated for Tuesday. The authority planned to price $250 million in capital grand receipts revenue bonds on a competitive basis.

Calls to the authority were not returned by Tuesday afternoon for details.

The 2008 bonds are due 2010 to 2026 and the 2008A bonds are due 2022 to 2026.

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