CHICAGO - Two Nebraska-based issuers are watching the market closely this week.

Omaha yesterday put a refunding on hold but issued $18 million of mostly new-money bonds, while the Omaha Public Power District continues to delay its $105 million issue - perhaps until early 2009.

The OPPD's decision to postpone the transaction comes after it opened a retail order period in mid-September before deciding to pull the deal without completing the sale. The issuer had taken retail orders on about one-third of the $105 million fixed-rate revenue bond issue, said Laura Kapustka, executive assistant to the utility's chief financial officer. But the transaction was pulled amid interest rates that the finance team believed did not "value OPPD's credit," she said.

"We didn't have an immediate need for the funds, and we have the flexibility of waiting," Kapustka said. "Interest rates had risen to a level that, considering the strong credit that we are, we didn't feel prudent to be selling in that market."

The OPPD's senior debt is rated Aa1 by Moody's Investors Service, and AA by Standard & Poor's.

In pulling the retail orders, the district's main concern was alienating those investors, according to Kapustka.

"We were concerned that if we didn't fill their orders, whether these retail investors would be there the next time," she said. Based on later talks with the finance team, she added: "The feeling is that the investors also recognized the volatility in the market and are aware that it was nothing specific to OPPD."

Citi is the senior manager on the deal, with Wachovia Securities LLC as co-senior manager. The district's financial adviser is U.K.-based Barclays Capital Inc., and Kutak Rock LLP is bond counsel.

The OPPD's board yesterday approved a measure allowing the district to enter the market with the bonds through April 1, 2009. Though the team is watching the market daily, OPPD won't complete the sale until it feels the market has become more stable, Kapustka said.

"Maybe after the election, or after the year is over; when some of those types of uncertainties no longer exist. It wouldn't be surprising if we went into 2009," she said. "We have the luxury of time so we're taking it."

The $105 million is structured as fixed-rate bonds with the new-money proceeds going to reimburse the OPPD for previous capital expenditures.

Meanwhile, the triple-A rated city of Omaha decided to move forward with $18 million of its planned $68 million transaction. The remaining $50 million, which will refund outstanding debt, is likely to be postponed until next year, said Carol Ebdon, the city's finance director.

The decision to sell the mostly new-money piece yesterday was in part an effort to avoid the possibility of rising rates the rest of the year, according to Ebdon.

"We don't have a crystal ball, but we know there are a lot of other issuers that want to issue by the end of the year, so we think there will be a larger supply, and we assume that rates will stay high," she said.

As a general rule, Ebdon said the city's finance team traditionally has entered the market as planned, but the extent of the recent turmoil prompted officials to take a closer look.

"The big question was could we even sell the $15 million [of new money], and would it make sense to hold off until rates came down," she said.

D.A. Davidson & Co. was the underwriter. Omaha captured a true interest cost in the 5.42% range, said Daniel Smith, senior vice president at the firm. Yields ranged from 2.75% with a 5% coupon on the short end to 5.75% with a 5.75% coupon on a 2023 maturity. Retail investors purchased about $4.4 million in term bonds due in 2028.

"It went swimmingly," Smith said. "We're pleased that there was a market out there today, there were buyers and sellers, and deals got done, and we were one of those."

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