The largest deal in the Far West this week was a $500 million California general obligation refunding and new-money issue, sold competitively Tuesday to Lehman Brothers at a true interest cost of 5.5094%.
Of the proceeds, $371 million will be used to refund outstanding state commercial paper. Bonds maturing after June 1, 2008, are subject to optional redemption prior to maturity.
Sources said the bonds were bought overwhelmingly by institutional buyers because the coupons did not lend themselves to retail investors.
"Size opens eyes, and there hasn't been a lot of issuance in California lately," said Joel Silva of Twentieth Century/Benham Mutual Funds. "It was priced fairly aggressively, and having a lot of maturities helped - or at least the sizes of the maturities did - so the deal went away fairly well."
In other negotiated deals, the Utah Housing Finance Agency sold $25 million of single-family mortgage bonds to senior manager Goldman, Sachs & Co. at a 6.2% yield on the 30-year debt.
Moody's Investor's Service and Standard & Poor's rate the debt triple- A. Co-managers included First Security Bank, Zions First National Bank Capital Markets, and George K. Baum & Co.
As of Wednesday, Goldman Sachs had yet to sell the allotments, a spokeswoman said. The bonds offer yields from 4.95% in 2003 to 5.95% at maturity and a supersinker at 6.20% in 2027.
On Tuesday, senior manager Smith Barney Inc. repriced $25 million of Northshore, Wash., School District GOs with yields from 3.8% to 5.65%. Moody's rates the debt Aa, with Standard & Poor's at AA-minus. Seattle- Northwest Securities Corp. and Seattle-First National Bank were co-managers on the deal.
Buyers in the market for California paper next week will have little to chose from. "Rates are down toward the bottom of the range here so you might get some refunding deals sneaking out," Silva said. "But it's pretty slow here in California these days."
The Padre Municipal Water District will competitively sell $11.2 million of certificates of participation on Tuesday. On Thursday, the Sacramento City Unified School District will sell approximately $7.9 million of special tax bonds.
Sherwood, Ore., will continue to put paper in the market with an $8.8 million GO offering in two separate issues Tuesday. And in Utah, Salt Lake City will sell $13.8 million of lease revenue refunding bonds, also on Tuesday.
