California and Ascension Health Plump Up the Calendar

After a one-week postponement due to stalled legislation, California will make its way to market with a $2 billion sale of various-purpose general obligation bonds.

This transaction is part of an estimated $9.52 billion in new volume slated for pricing this week, according to Ipreo LLC and The Bond Buyer.

The estimate is a significant jump from the revised $4.47 billion that made its way to market last week, according to ­Thomson Reuters.

The California deal — which will be priced by JPMorgan and Morgan ­Stanley on Thursday after a retail order period tomorrow and Wednesday — was cleared to go to market after the Assembly passed a cash-management bill whose pending approval had delayed the pricing.

The bill’s purpose was to ensure the state government would be able to manage its cash-flow issues and avoid the liquidity crisis it experienced in 2009, when it paid creditors with IOUs to preserve money for debt service and other priority payments.

The debt has the lowest of all state GO ratings, carrying a Baa1 from Moody’s Investors Service and BBB from Fitch Ratings. The GOs were downgraded to A-minus from A by Standard & Poor’s on Jan. 13 due to a severe budget imbalance and the potential reappearance of cash-flow problems, according to a report from the rating agency.

Illinois, which is also selling GO debt this week, has the second-lowest state GO ratings, with an A2 by Moody’s, A-plus by Standard & Poor’s, and A by Fitch.

This week, Illinois will add to its Build America Bond tally when it sells $356 million of GOs, including $300 million of BABs, and $56 million of traditional taxable GOs. Both are structured to mature from 2011 to 2035 and will fund school-improvement grants, among other projects.

San Francisco tomorrow will issue a combined $357 million of GOs in the competitive market. A total of $217.3 million consists of taxable BABs structured to mature from 2020 to 2030, while $140.9 million will be tax-exempt GOs structured to mature from 2010 to 2019. They are rated Aa2 by Moody’s, AA by Standard & Poor’s, and AA-minus by Fitch, which revised its outlook to negative on Feb. 24. Proceeds will finance park renovations and the rebuilding of San Francisco General Hospital.

Elsewhere in the negotiated market, the District of Columbia will share the spotlight when Goldman, Sachs & Co. prices $711 million of revenue refunding bonds on Wednesday, following a retail order period tomorrow. The bonds are rated Aa2 by Moody’s, AAA by Standard & Poor’s, and AA by Fitch.

The deal consists of $696 million of tax-exempt income-tax secured revenue refunding bonds in Series 2010A, as well as $15.1 million of taxable income-tax secured revenue bonds in Series 2010B.

In the health care sector, two hefty offerings are being planned on behalf of the Ascension Health Senior Credit Group, some issued as fixed rate and some as variable rate.

The nation’s largest nonprofit health care provider will enter the market Wednesday with the fixed-rate piece of the deal, selling $670.5 million of mostly new fixed-rate debt tentatively set to mature through 2040.

The fixed-rate piece is expected to include five series of bonds each from a different state issuer, the largest of which is $205.6 million from the Michigan State Hospital Authority.

Additionally, $169 million will be issued by the Wisconsin Health and Educational Facilities Authority, $140.8 million by the Rutherford County, Tenn., Health and Educational Facilities Board, $85.3 million by the Connecticut Health and Educational Facilities Authority, and $69.5 million by the Tarrant County, Tex., Cultural Educational Facilities Financing Corp.

The floating-rate piece of the transaction — $675 million — will carry a final maturity in 2050. About $236 million of the deal is structured in a “windows mode” and that piece will price on March 16. The remainder is structured as seven-day variable-rate bonds and that piece will be marketed on March 24. The highly rated system provides its own self-liquidity.

Meanwhile, in the Northeast, a flurry of large deals is on tap from a handful of issuers.

The New York State Thruway Authority is planning to issue $582 million of second general highway and bridge trust fund bonds in a negotiated deal anticipated for pricing by RBC Capital Markets tomorrow after a retail order period today.

The deal is structured as $350.4 million of taxable BABs in Series 2010B and $231.6 million of tax-exempt debt in Series 2010A. The bonds are rated AA by Standard & Poor’s and AA-minus by Fitch.

The New York City Municipal Water Finance Authority is gearing up to sell $400 million of taxable water and sewer system second general resolution revenue bonds designated as taxable BABs.

Jeffries & Co. is planning to price the water deal tomorrow with a 2042 maturity and ratings of Aa3 from Moody’s, AA-plus from Standard & Poor’s, and AA from Fitch.

Massachusetts is planning to issue $538.8 million of GO refunding bonds when Morgan Stanley prices the deal on Thursday with a structure of bonds maturing from 2011 to 2014, which will bear interest based on the Securities Industry and Financial Markets Association index.

The new debt will bear interest at the adjusted SIFMA rate, plus additional yet-to-be-determined interest, and will retire GO refunding bonds originally sold as Series 2005A variable-rate demand bonds that are due Feb. 1, 2028.

The SIFMA rate means the level of the most recently effective index rate that is compiled from the weekly interest rate resets of tax-exempt variable-rate issues included in a database maintained by ­Municipal Market Data that meet specific, SIFMA-established criteria.

The Massachusetts GOs are rated Aa2 by Moody’s and AA by the two other major rating agencies, according to the preliminary official statement.

Also on tap this week, Detroit is planning to issue $250 million of distributable state aid limited-tax GO debt in a deal planned for pricing by Goldman on Thursday and rated A1 by Moody’s and AA-minus by Standard & Poor’s. The deal, which is structured to mature from 2011 to 2036, will fund a portion of the city’s projected operating deficit and pay the costs of ­issuance.

The bonds are secured by a pledge of certain shared revenue payments derived from a statewide Michigan sales tax that Detroit expects to receive, and are additionally secured by distributable state aid payments, according to the preliminary official statement.

The financing comes as the city continues to deal with financial challenges regarding declining population and rising unemployment that has limited its access to capital in recent years due to downgrades in its underlying credit ratings, and has prompted officials to follow a deficit-elimination plan, according to the document.

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