Washington State topped the competitive calendar yesterday with $155 million full faith and credit bonds and permanent investors and trade buyers took all but $6 million by the close of trading.
Once again, secondary trading took a back seat to the primary arena where more than $900 million reached the market. Traders reported that prices of seasoned bonds finished the session 1/4 point lower in very light activity.
An account headed by Lehman Brothers won the Washington bonds in close bidding, taking $150 million with a true interest cost of 6.8021$ and $5 million with a TIC of 6.8495%. A group led by Dillon, Read & Co. was only a basis point away on the larger loan with a 6.8174% TIC.
On the larger offering, the $52 million term bonds, due 2016, were priced at approximately 97.627 as 6.70s to yield 6.90% and the serials were scaled from 5% in 1993 to 6.70% in 2006 and 2007. There were no formal reofferings for the 1992 serial bonds or the $30.6 million 6 3/4% term bonds of 2011.
The smaller loan was comprised of serial bonds yielding from 4.50% in 1992 to 6.80% in 2008 and term bonds returning 6.85% in 2011 and 6.875% in 2016.
Washington's general obligation bonds are rated double-A by Moody's Investors Service, Standard & Poor's Corp., and Fitch Investors Service.
An officer at Lehman Brothers reported "very strong retail interest with lots and lots of small orders." The tax-exempt bond funds accounted for most of the interest in the term bonds, he added. There were still term bonds of 2016 available from dealers and syndicate price restrictions are expected to be lifted this morning.
In the negotiated market, an account led by Goldman, Sachs & Co. marketed $200 million Hawaii airport system revenue bonds backed by Financial Guaranty Insurance Co. and rated triple-A by Standard & Poor's and Moody's. The interest on the bonds is subject to the federal alternative minimum tax for individuals.
The $118 million term bonds due 2020 were offered to investors at 97 1/4 as 7s to yield 7.22%. The $40.7 million term bonds of 2010 were priced at 98.701 as 7s to yield 7.125%. And serial yields ran from 5.70% in 1995 to 6.75% in 2004.
Goldman, Sachs also headed an account that priced $150 million Rhode Island Depositors Economic Protection Corp. special obligation bonds. This issue will be insured by MBIA Corp. and carry Moody's and Standard & Poor's triple-A ratings.
The current interest portion of the offering included serial bonds yielding from 5.70% in 1995 to 6.70% in 2004 and term bonds yielding 7.10% in 2018 and 7.25% in 2021. There were also $37.2 million 7 1/2% term bonds of 2014 priced to the 2003 par call to yield 7.05%.
The capital appreciation bonds will yield 6.95% in 2005 and 2006 and 7% in 2007 and 2008.
Returning to the competitive market, a Merrill Lynch & Co. account won $40.9 million Union County, N.J., general improvement unlimited tax bonds and reported a $16 million balance.
The issue, rated Aaa by Moody's and AA-plus by Standard & Poor's, was reoffered to investors at yields ranging from 5% in 1993 to 6.70% in 2011.
A Clayton Brown & Associates group had the successful bid for $36 million Milwaukee, Wis., unlimited tax public improvement bonds and scaled them from 5% in 1993 to 6.80% in 2006.
There was an unsold balance of $7.2 million yesterday. The issue is rated AA-plus by Standard & Poor's and Aa by Moody's.
Memphis, Tenn., awarded $31 million unlimited tax refunding bonds to a First Tennessee Bank account. The issue was scaled out to a 6.10% in 2000.
The bonds are rated double-A by Moody's and Standard & Poor's and there was an $18 million unsold balance.
First Union Securities was senior manager for an account that bought $29 million Henderson County, N.C., unlimited tax school and community college bonds. The issue, rated A1 by Moody's and A-plus by Standard & Poor's, was scaled out to 6.80% in 2010 and sold down to a $13.8 million balance.
In the secondary market, prices closed marginally lower despite a late rebound in the government sector. Dollar bond prices were still off 1/4 late in the session, while yields on high-grade serials and prerefunded issues were up two to three basis points.
In dollar bond trading, Florida State Board of Education 7 1/4s, due 2023, finished up at 102 3/4-103 1/4 to yield 6.87% to the 2004 par call. New York LGAC 7s of 2015 closed at 94 7/8-95 1/8 yield y.43% to maturity. Massachusetts 6s of 2011 were at 84 3/4-85, where they returned 7.45%. And Los Angeles County Transportation Commission insured 6 3/4s of 2018 were at 97 7/8-98 1/8 yield 6.90%.
The market for prerefunded bonds with a 1995 call closed at 5.82% bid, 5.78% offered.
New York City will be the highlight of today's new-issue calendar with its offering of $485 million tax-exempt bonds. The city will also be marketing $115 million of taxable bonds. both issues will be priced by an account headed by Goldman, Sachs & Co.
Late yesterday, traders said that the account was discussing a yield of about 8 5/8% for the longest maturities. Some felt that the deal will attract strong enough interest for the yields to be lowered modestly.
Standard & Poor's Corp. of Monday affirmed the city's A-minus rating, but with a negative outlook. Last Friday, Moody's affirmed its Baal rating for city GO bonds.
California Health Facilities Financing Authority, $88 million hospital revenue bonds (Childrens Hospital of Los Angeles) 1991 series A.
Ratings: Moody's A1; S&P's A-plus.
The $75 million term bonds of 2021 are being offered on a preliminary basis at 99 1/8 as 7.10s to yield 7.17%. The serial bonds have been tentatively priced to yield from 5% in 1992 to 6.55% in 2001.
Goldman, Sachs & Co. is senior manager for the underwriters. The official award is expected today.
Western Michigan University, $64 million general revenue bonds.
Ratings: Moody's Aaa; S&P's AAA. AMBAC insured.
The offering is expected to be comprised of $35.9 million term bonds of 2021 priced at 94.35 as 6 1/2s to yield 6.95%, $10.7 million term bonds of 2011 offered at 98.378 as 6 3/4s to yield 6.90%, and serials scaled from 6.10% in 2000 to 6.70% in 2006. Serials maturing 1992-99 are not being formally re-offered.
The issue is being negotiated by an account led by Lehman Brothers. The formal award is expected today.
Detroit City School District, Mich., $20.3 million unlimited tax building and site bonds.
Ratings: Moody's A1; S&P's AA.
All bonds were priced at par.
Serial yields run from 5.60% in 1994 to 6.50% in 2001. The return for the $21 million term bonds of 2011 has been set at 7.15%.
The bonds were marketed through an account headed by M.R. Beal & Co. The verbal award was received yesterday.