Puerto Rico, Illinois Set to Splurge With Billion-Plus Deals

The Puerto Rico Sales Tax Financing Corp. and Illinois will each bring billion-dollar financings to the primary market this week that will contribute to a $5.47 billion slate in estimated new volume, according to Ipreo LLC and The Bond Buyer.

Last week, issuance dipped to a revised total of $2.89 billion in competitive and negotiated sales as a result of the market being closed on Monday in observance of the Martin Luther King Jr. holiday, according to Thomson Reuters.

This week, Citi will kick-start the negotiated activity with the pricing of the Puerto Rico deal on Wednesday, following a two-day retail order period that begins today.

The Series 2010 A bonds consist of sales tax revenue subordinate-lien debt that is structured to mature in three tranches, including current interest bonds from 2015 to 2030, capital appreciation bonds maturing from 2030 to 2037, and a convertible capital appreciation bond due in 2029. The bonds are rated A2 by Moody’s Investors Service, A-plus by Standard & Poor’s, and A by Fitch Ratings.

The debt is secured by a portion of the commonwealth’s island-wide sales and use tax. Proceeds will be used to repay outstanding obligations and fund various projects, according to the preliminary official statement.

Illinois is planning to issue its $1 billion of state GO debt as taxable Build America Bonds when Barclays Capital prices the deal on Thursday, after taking indications of interest on Wednesday.

The Series 2010-1 bonds are rated Aa2 by Moody’s, A-plus by Standard & Poor’s, and A by Fitch. The maturity structure was not available by press time. Proceeds are being used to finance state capital and transportation projects and are backed by the full faith and credit of the state.

In the Northeast,  the New York City Water Authority will also issue a sizable BAB deal tomorrow when it sells $400 million of water and sewer system second-general resolution revenue bonds in a negotiated deal being senior-managed by Ramirez & Co.

The bonds are rated Aa3 by Moody’s, AA-plus by Standard & Poor’s, and AA by Fitch. The structure of the deal was not finalized at press time.

Proceeds will be used to pay principal and interest on the authority’s outstanding commercial paper notes, and fund construction of upcoming capital plan projects.

Deals to finance health care, public power, and environmental and energy projects are also expected to come to market this week in the Oregon, California, and Missouri markets, respectively.

A $260 million sale from Oregon’s Medford Hospital Facilities Authority will tentatively be priced this week by Bank of America Merrill Lynch. However, an underwriter on Friday said the deal could get pushed to next week pending the distribution of the official statement to the street ahead of the planned pricing on Thursday.

The bonds, which are being sold on behalf of the Medford-based Asante Health System, are backed by revenues of the health system. It operates two main hospitals, the Rogue Valley Medical Center in Medford and Three Rivers Community Hospital in Grants Pass, as well as several health care affiliates throughout the southern Oregon and Northern California region.

Moody’s doesn’t maintain an underlying rating on Asante bonds and only rates an prior issue that was insured, while Standard & Poor’s rates the new bonds A-minus.

Meanwhile, the Southern California Public Power Authority is gearing up to sell $235.9 million electric system revenue offering to finance phase one of the Milford Wind Corridor project.

Barclays is planning to price the deal on Thursday after a retail order period on Wednesday. Structured as serial bonds maturing from 2011 to 2030, the debt is rated A1 by Moody’s, and AA-minus by Standard & Poor’s.

The bonds are is backed by electric system revenues paid to the authority by the Milford project participants, including the Los Angeles Department of Water and Power and the cities of Burbank and Pasadena, according to the POS.

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