Florida's Citizens Leads Slate With Up to $2B of One-Year Notes

Retail investors and money market funds will be targeted by underwriters preparing to price some of the largest offerings during a week that expects to see $7.9 billion of estimated new-issue volume in the long-term market and a note deal of up to $2 billion in the short-term market.

Last week, the market saw a revised $6.22 billion in new competitive and negotiated supply combined, according to The Bond Buyer.

This week, the Florida Citizens Property InsuranceCorp. is hoping to lure money market fund managers to its one-year, tax-exempt note sale, which at $1.5 billion to $2 billion is the largest deal of the week.

Underwriters from Citi, Goldman, Sachs & Co., Merrill, Lynch & Co., and Morgan Stanley will team up to price the deal tomorrow. The notes are expected to carry ratings of MIG-1 from Moody's Investors Service and SP1-plus from Standard & Poor's, and are being sold to provide liquidity for the current hurricane season, which also began on June 1.

The Series 2008 A-2 offering consists of uninsured, senior secured notes with interest payments on Dec. 1 of this year and at maturity on June 1, 2009.

Proceeds from the note sale will be invested until the state-run nonprofit property insurer needs it to pay claims on its high-risk accounts namely windstorm policies.

The tax-exempt notes are replacing a portion of the $4.75 billion of taxable auction-rate securities the agency had used as an affordable source of liquidity until the ARS market collapsed earlier this year.

In the long-term market, the Puerto Rico Electric Power Authority will kick off activity with an $800 million new-money and refunding sale scheduled for pricing tomorrow by JPMorgan. The two-pronged deal consists of $722.1 million in Series WW that matures from 2010 to 2028 with term bonds in 2033 and 2038, and a $78.6 million refunding portion, which matures from 2011 to 2017.

The bonds are rated A3 by Moody's, BBB-plus by Standard & Poor's, and A-minus by Fitch Ratings.

The Northeast market will see nearly $1.5 billion in new volume thanks to a trio of deals from New York and Connecticut issuers this week.

The New York State Dormitory Authority will issue $622 million of revenue bonds on behalf of New York University on Wednesday in a negotiated deal being senior managed by Morgan Stanley. The bonds are scheduled to mature from 2010 to 2048.

The Dorm Authority's bonds, which are payable with university revenues, are expected to be rated Aa3 by Moody's, and AA-minus by Standard & Poor's.

In addition, the New York State Urban DevelopmentCorp. will sell $441.4 million of service contract revenue refunding bonds on Thursday following a retail order period on Wednesday. Bonds are slated to mature serially from 2009 to 2028 with a term bond in 2030.

Connecticut will add to the Northeast bounty when it brings a $400 million GO sale to market on Wednesday following a retail order period scheduled to begin today.

Morgan Stanley will price the deal with a structure that includes serial bonds maturing from 2009 to 2028. The state's GO credit is rated Aa3 by Moody's, AA by Standard & Poor's and Fitch.

Two of the only other sizable deals this week hail from the tobacco and power sectors.

The largest of the pair is a $400 million offering from Ohio's American Municipal Power Inc. to finance the Prairie State Energy campus project. JPMorgan will offer the bonds to retail investors on Wednesday ahead of the official pricing on Thursday.

The bonds, which are slated to mature from 2016 to 2028 with term bonds in 2033, 2038, and 2043, are expected to carry ratings of A1 from Moody's, and A from Standard & Poor's and Fitch. There is a possibility the deal will be fully or partially insured by Assured Guaranty Corp., but an underwriter said the decision to use insurance at all was still being hammered out at press time on Friday.

Meanwhile, the South Carolina Tobacco Settlement Revenue Management Authority will again attempt to sell its $298.2 million asset-backed tobacco refunding deal this week after it was postponed last week due to market conditions.

The deal's structure consists of a single bullet maturity due in 2018, and is tentatively expected to be priced by Goldman on Thursday, according to an underwriting source at the firm.

The tobacco bonds are rated Baa3 by Moody's, BBB by Standard & Poor's, and BBB-plus by Fitch.

With no major deals planned for Friday, the market will turn its attention to an upcoming $1.5 billion California GO sale, which is tentatively planned for pricing on June 24 even as California legislators continue to wrangle with budget delays.

The state will begin a two-day retail order period Friday and conclude it next Monday in advance of the deal.

Citi is the book-running lead manager for the deal's 35-member syndicate.

Ahead of the deal, Moody's affirmed its A1 rating on California's full faith and credit pledge, while the other two major rating agencies rate the state's outstanding GO credit A-plus. Standard & Poor's has a stable outlook, while Fitch has had the state on negative watch since January.

For reprint and licensing requests for this article, click here.
Buy side
MORE FROM BOND BUYER