Amid Summer Slump, Ohio, Minnesota Deals Lead

Given the recent summer doldrums in the municipal market, investors should be eager to sink their teeth into meaty new issues on the primary market calendar this week.

The slate is led by an $800 million Ohio hospital financing in the negotiated market and a $600 million Minnesota general obligation offering on the competitive side.

According to Ipreo LLC and The Bond Buyer, an estimated $9.56 billion in total volume is expected to be priced this week, nearly double the revised $4.55 billion that came to market last week, according to Thomson Reuters.

A $1.4 billion revenue sale from the North Texas Tollway Authority - with $825 million of Build America Bonds - was the largest deal. It priced last Monday amid the calm of early August.

Morgan Stanley priced the single-A tax-exempt current interest bonds due in 2039 with a 6.34% yield - 165 basis points more than the generic triple-A GO scale in 2039 published by Municipal Market Data at the time of the pricing.

Goldman, Sachs & Co. priced the BABs, which consisted of a final 2049 maturity priced to yield 6.71%, 202 basis points higher than the 2039 maturity on MMD's triple-A GO scale at the time.

This week, an $800 million hospital deal from the Ohio Higher Educational Facilities Commission on behalf of the Cleveland Clinic Health System will kick off the brisk activity in the negotiated market this week when it is priced by JPMorgan tomorrow after a retail order period today.

The deal's two parts consist of $300 million of Series 2009A revenue refunding bonds structured as one bullet maturity due in 2039, and $500 million of Series 2009B new-money bonds maturing serially from 2011 to 2029 with terms in 2034 and 2039.

The bonds will carry ratings of Aa2 from Moody's Investors Service and AA-minus from Standard & Poor's.

Meanwhile, large deals in California, New York, Illinois, and Texas are also expected to make their way to market this week.

The Bay Area Toll Authority is planning to issue $773.3 million of toll bridge revenue debt when Merrill, Lynch & Co. prices the offering on Wednesday after a retail order period tomorrow with a structure that consists of serial bonds maturing from 2020 to 2039.

Elsewhere in the state, the California Health Facilities Financing Authority will issue $475 million of revenue debt for Santa Rosa-based St. Joseph Health System when Morgan Stanley prices the deal on Thursday. The structure of the sale was not yet determined at press time on Friday.

The toll authority revenue bonds are rated Aa3 by Moody's, AA by Standard & Poor's, and AA-minus by Fitch Ratings. Ratings for the St. Joseph Health System issue were not available by press time.

Meanwhile, the New York Transitional Finance Authority will sell $600 million of future tax-secured subordinate-lien revenue refunding bonds in a deal being priced by Morgan Stanley on Wednesday for institutional investors, following a two-day retail order period beginning today.

The deal's structure will not be available until the day of the pricing, according to Ray Orlando, director of investor relations for the mayor's office of management and budget. The debt is rated Aa2 by Moody's, AAA by Standard & Poor's, and AA-plus by Fitch.

In the Midwest, the Greater Chicago Metropolitan Water Reclamation District is planning to sell $600 million of taxable GO capital improvement direct-pay BABs. Mesirow Financial Inc. will price the deal tomorrow with a single 2038 maturity and the natural triple-A ratings the issuer expects from all three major rating agencies.

While the deal is expected to attract mostly institutional investors, it could eventually end up in some retail hands, according to Dominick Mondi, senior managing director of Mesirow in Chicago.

"Money managers will use it in different ways and it will trickle down to retail," he said.

A $450 million sale of GO and refunding bonds is planned by the Texas Public Finance Authority tomorrow when Merrill prices the two-pronged deal, which includes BABs and is rated Aa1 by Moody's and AA by Standard & Poor's.

Series 2009A consists of tax-exempt bonds maturing from 2010 to 2020, while SeriesB is subdivided into Series B1, which is tax-exempt, and Series B2, which are BABs - both tentatively maturing from 2020 to 2029. The firm was still hammering out the size of each of the Series B portions on Friday at press time.

Minnesota's $600 million GO new-money and refunding sale will be sold in the competitive market tomorrow in four series, the largest of which is Series F, consisting of $299.2 million of various-purpose refunding bonds maturing from 2010 to 2021.

Series D totals $192.2 million and consists of GO various purpose bonds maturing from 2010 to 2029, while Series E, $80 million of highway GO bonds, matures from 2010 to 2029. Series G, meanwhile, totals $28.5 million and will consist of GO highway refunding bonds maturing from 2011 to 2021.

The Minnesota bonds are rated Aa1 by Moody's, and have natural triple-A ratings from both Standard & Poor's and Fitch.

Elsewhere in the competitive market, a $375 million water revenue offering is expected to be issued tomorrow by the San Francisco Public Utilities Commission. It will be the state's largest competitive deal this year, besting a $350 million Santa Clara County GO sale on May 13. Rated A1 by Moody's and AA-minus by Standard & Poor's, the deal is expected to mature from 2011 to 2039.

 

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