New issues continued to dominate tax-exempt market activity yesterday with dealers focusing on a successful New York Local Government Assistance Corp. offering.
Secondary trading was very light and prices closed essentially unchanged from Tuesday's closing quotes.
An official at Lehman Brothers, senior manager for the LGAC underwriters, said that because of strong investor interest, the size of the offering was increased to $558.2 million from $450 million, and yields were trimmed five to 10 basis points on the serials and capital appreciation bonds and two to three basis points on the term maturities.
The maximum yield came in at 7.595% for $253.9 million term bonds of 2020 priced at 98 7/8 as 7 1/2s. The $43.4 million 7% discount bonds, due 2021, were offered at 94.062 to yield 7.50%. And the $43.7 million term bonds of 2011 were priced at 98.677 as 7 3/8s to yield 7.50%.
Serial yields were scaled from 4.90% in 1992 to 7.40% in 2007. And the Cabs will yield 7.40% in 2008-10.
The bonds are rated A-plus by Standard & Poor's Corp. and Fitch Investors Service and A by Moody's Investors Service.
The Lehman Brothers official said that there was "good across-the-board interest" for the issue. Among the buyers were property and casualty insurance companies, investment advisers, retail, and bond funds. The funds bought both term and serial maturities, he noted.
The net interest rate for the borrowing was 7.52%. "We aggressively negotiated this rate with the underwriters, and we are satisfied with the outcome," said New York State Comptroller Edward V. Regan.
A spokeswoman for the comptroller said the corporation will turnover $500 million of yesterday's bond sale proceeds to New York City next week.
The remaining bond proceeds will be used for issurance cost and funding debt service reserves, the spokeswoman said. She added that the corporation, authorized to sell $1.6 billion of revenue bonds in the state's fiscal year 1992, is expected to sell $1.1 billion of bonds over the remaining three quarters of the fiscal year.
In another negotiated sale, a Smith Barney, Harris Upham & Co. syndicate marketed $189.8 million Lee County, Fla., solid waste system revenue alternative minimum tax bonds with a maximum yield of 7.25% in 2011.
The $73.5 million maximum yield bonds were formally priced at 97.35 as 7s. A $63.8 million 2013 term maturity was offered at 92 as 6 1/2s to yield 7.225%. And serial bond returns ranged from 6% in 1995 to 7.15% in 2006.
The bonds are backed by MBIA Corp., and rated triple-A by Standard & Poor's and Moody's.
An account led by A.G. Edwards & Sons priced $72.5 million Cuyahoga County, Ohio, various purpose GO bonds with yields ranging from 4.85% in 1992 to 6.35% in 2000 for the serial portion of the loan. A $30.2 million mandatory sinking fund maturity in 2013 was offered at 99 1/4 as 7 to yield 7.066%.
The bonds are rated Aa by Moody's.
Over in the competitive market, a Bank of America account won $35.8 million California State University insured housing system refunding revenue bonds.
The $7.1 million term bonds of 2015 were offered at par to yield 7%. Serial returns were out to 7% in 2011.
The issue is rated triple-A by Moody's and Standard & Poor's because of the backing by AMBAC Indemnity Corp. An unsold balance was not available late yesterday.
A Merrill Lynch & Co. group had the successful bid for $20 million Ohio Building Authority state facilities revenue bonds (DAS Data Center). The bonds were priced to yield from 4% in 1992 to 6.95% in 2010 and sold down to an $11 million balance.
The bonds are rated A-plus by Standard & Poor's and A by Moody's.
Notes were relatively active yesterday and were getting a good response, traders said. Not only was there decent follow through for Tuesday's $3.9 billion New York State issue, but also good interest from permanent investors for the recent $1.3 billion Los Angeles County note offering.
Syndicate price restriction were removed in the morning from the Los Angeles County issue and after breaking to a 4.65% bid, 4.63% offering, they traded up to a 4.60%. Late yesterday, the notes were being quoted at 4.58% bid, 4.55% offered.
In secondary dollar bond trading, Florida State Board of Education 7 1/4s of 2023 were quoted late in the day at 100 3/4-101 1/4 to yield 7.07% to the 2004 par call. New Jersey Turnpike Authority 7.20s, due 2018, closed around 101 1/4-1/2 to yield 6.94% to their 1999 par call.
Hawaii AMT airport 7s 2020 were quoted near the close at 97-97 1/8 to yield 7.24%. And Metropolitan Seattle 6 7/8s of 2031 were at 94 7/8-95 1/8, where they returned 7.25%.
In prerefunded bond trading, prices were firm but unchanged on the day. Issues with a 1995 call were quoted in late trading in a tight range of 5.05% bid, 5.94% offered.
High-grade serial bond traders described their market as firm with the bid side up in price close to five basis points from the lows of Tuesday morning.
Negotiated Pricings
Birmingham-North Birmingham Medical Clinic Board, $65 million revenue bonds series 1991A and 1991B (Carraway Methodist Hospitals).
Ratings: Serials, Moody's Aaa; Standard & Poor's AAA. AMBAC insured. Terms, Moody's Baal; Standard & Poor's BBB-plus.
The series A offering is comprised of $30.8 million term bonds priced at 93.194 as 7 1/2s to yield 8.15% and serials priced at par and scaled from 4.08% in 1992 to 6.60% in 2002.
The series B issue was priced at 98 as 8s to yield 8.192% in 2015.
The bonds were marketed through an account headed by Merrill Lynch & Co. The written award is expected today.
Chicago, Ill., $45 million Chicago-O'Hare International Airport special facility revenue bonds (Lufthansa German Airlines project), series 1990.
Ratings: Moody's Aaa; Standard & Poor's AAA. Letter of Credit: Bayerische Landesbank.
The bonds were offered at 95 5/8 as 7 1/8s to yield 7.505% in 2018. The interest on the bonds is subject to the federal alternative minimum tax for individuals.
Smith Barney, Harris Upham & Co. is senior manager for the underwriters. The official award is expected today.
West Virginia Housing Development Fund, $40.9 million housing finance bonds, series of 1991 A&B. The offering is comprised of $25 million AMT series A bonds and $15.9 million series B bonds.
Ratings: Moody's Aa; Standard & Poor's A-plus.
Yields on the AMT issue run from 5.25% in 1992 to 7.20% in 2005 and 7.65% in 2022.
Returns on the non-AMT bonds run from 5% in 1992 to 7% in 2005 and 7.37% in 2017.
The issue is being negotiated by an account managed by Wheat, First Securities Inc. The formal award was expected yesterday.
Vermont Municipal Bond Bank, $36.5 million 1991 series 1 bonds.
Ratings: Moody's A; Standard & Poor's A-minus.
The term bonds, due 2022, were priced at 95.37 as 6 7/8s to yield 7.25%. The term bonds of 2011 were offered at 98.392 as 7 s to yield 7.15%. And serial yields ran from 5.25% in 1992 to 7.05% in 2007.
Goldman, Sachs & Co. and Lehman Brothers were joint managers. The official award is expected today.
