BRADENTON, Fla. — Nashville will be in the bond market Wednesday and again April 16 to sell a total of $565.8 million of debt.
Both fixed-rate offerings should be well received since there's not a lot of Tennessee paper available, and essential-service revenue bonds are in demand, according to market participants.
The Nashville-Davidson Metropolitan Government will sell $227.9 million of revenue bonds for water and sewer projects, and $337.8 million of general obligation bonds for city capital improvements. Both deals will refinance commercial paper and provide new money for various projects.
First Southwest Co. is Metro's financial advisor.
Morgan Stanley & Co. will be book-runner for Wednesday's water and sewer bond sale, which is expected to have serial maturities from 2022 to 2033, and term bonds of $58.85 million maturing in 2038 and $75.56 million maturing in 2043.
Other underwriters on the deal are Jefferies & Co., Raymond James & Associates Inc., Piper Jaffray & Co., Rice Financial Products Co. and Wiley Bros.-Antree Capital LLC. Bass, Berry & Sims PLC is bond counsel and Adams and Reese LLP is underwriters' counsel.
The water and sewer bonds are rated Aa3 by Moody's Investors Service and AA-minus by Standard & Poor's.
Nashville will be back in the market April 16 with Goldman, Sachs & Co. pricing the GO bonds, which mature serially between 2020 and 2033. Other firms offering the bonds are JPMorgan, Piper Jaffray, Rice Financial, Jeffries, Raymond James, Duncan-Williams Inc. and Fifth Third Securities.
Bass Berry will be bond counsel for the GO sale, while Charles E. Carpenter PC will be underwriters' counsel.
The GO bonds are rated Aa1 by Moody's and AA by S&P.
"I think both deals will do very well, as long as the muni market stays stable, which I think it will," a trader said. "Right now there is not a lot of Tennessee paper around so I would expect good retail demand also."
Metro's finance director, Rich Riebeling, said both transactions are plain vanilla and structured to wrap around existing debt, but for Nashville fans it could be the city's last offering until 2017.
"Both transactions are designed to meet basic infrastructure needs of the city, funding improvements to the water-sewer system and a broad range of public improvement projects previously authorized by the Metro Council," said Riebeling.
Nashville's strong ratings on both issues should generate a high level of interest in the market, he said, adding: "We are consistently told that the market has a favorable view of Nashville paper, which should only be heightened with our strong economic growth and recent national attention."
The bond offerings come as the economy in Tennessee is beginning to thaw, and the city is about to open a new, 1.2-million-square-foot convention center called Music City Center. The grand opening is set for May 19-20 for the facility, which will more than double Nashville's meeting and exhibition space.
Metro's Convention Center Authority sold $623 million of bonds in 2010 to build the $585 million Music City Center, the city's largest public works project ever. A majority of the bonds benefited from a non-tax backup pledge of revenues from Nashville's general fund.
Riebeling said revenues for advanced bookings for the new facility have exceeded projections by $12 million in fiscal years 2011 and 2012, and the trend is expected to continue for the current year.
The last time Nashville was in the market was on Jan. 30 to sell $245.5 million of GO refunding bonds. Riebeling said he was pleased with the results, which provided $13.3 million in present-value savings, or 5.26% of refunded par.