SAN FRANCISCO - Nevada's Clark County Water Reclamation District pulled a $250 million bond deal off the calendar yesterday, citing the continued turbulence in the markets.
The district had been planning to sell the bonds competitively Tuesday.
The sale date had been penciled in several months ago, said John Bonow, managing director at Public Financial Management, the district's co-financial advisers with Hobbs, Ong & Associates Inc.
"Our process this week has been to look at the market, and whether any comparable transactions of high credit quality and size have been received," he said Wednesday, before the final decision was made. "We will most likely postpone the transaction until more of a buy-side shows up at acceptable rates."
The deal would have been by far the largest competitive deal since the Lehman Brothers Holdings Inc. bankruptcy. There hasn't been a competitive sale topping $100 million since Sept. 11, when the Florida Department of Environmental Protection priced $156 million in revenue bonds, four days before the Lehman bankruptcy.
The largest competitive long-term bond deal since that bankruptcy was for $64.3 million, brought by the Kansas Development Finance Authority on Sept. 18.
The Clark County wastewater district isn't the only competitive issuer on the sidelines.
A Minnesota official told The Bond Buyer this week that the state wants to see some other large issues successfully bid before taking a planned $443 million general obligation bond deal to auction.
The Clark County Water Reclamation District would bring a strong credit to the market, according to two ratings agencies.
Standard & Poor's last week upgraded the district's rating to AAA from AA-plus, and Moody's Investors Service Monday affirmed its Aa2 rating.
"The district has a newly minted triple-A from Standard & Poor's, so we're hopeful that if indeed the market stabilizes somewhat, or becomes less chaotic, we'd be among the issues favorably received by investors," Bonow said.
The district's bonds carry a double-barreled pledge of the wastewater system's net revenues, and a limited tax general obligation pledge from the district.
"The raised ratings reflect the district's continued strong financial performance and very strong liquidity position," according to the Standard & Poor's report issued when it upgraded the district to AAA.
The district covers most of the unincorporated areas of Clark County, with a population of more than 850,000. Proceeds of the bonds will be used to finance part of the district's five-year, $1.3 billion capital improvement plan to maintain and expand its wastewater systems.
The district's practice has been to sell competitively, but Bonow said that the method of sale could be reconsidered if the market remains murky.
Competitive deals are more common in Nevada than in many other states; by volume, Nevada issuers actually sold more bonds competitively than through negotiation in 2007, according to Thomson Reuters data, bolstered by issuers like the Clark County School District and the state government, which routinely sell large, highly rated bond issues through auction.
