Monday, January 30, 2012

Bonds in being

So I know that there are not a half dozen people outside the fifth floor who care... but for the muni finance wonks this is is actually curious reading the breaking news that Pittsburgh has (finally) agreed to a bond issuance that will be approved tomorrow.   It looks like most, but not all of the paper found buyers by the end of the day today.

Beyond it being $125 million or so which is not a small number, why is it of interest?  According the the Preliminary Official Statement on this offering, part of it is to refinance some old bonds. Specifically these 2002 Series A bonds.  Thing is that these bonds are callable on March 1, 2012, with a minimum of a 30 day notice to the registered holders of those bonds.   30 days left of March 1st is...  tomorrow? You are talking seriously down to the wire in all of this. 

Curious discrepancy in numbers.   Dow Jones says this was for $114 million.  POS said $125 million.  Trib breaking news says it is 80+57 which I add up to be $137 million.   I'm quite sure the number for the debt is a hard number at the end of the day, just curious reporting to see the different numbers floating around.

Like I said..  not quite the stuff for a general audience, but beyond any headines on this, there must be a very serious inside game of poker going on between the city, ICA and everyone else involved in the timing of this.  Given how much ink we spill over some incredibly minutia things, you think this all would get a little more coverage or public debate. 

4 Comments:

Anonymous Anonymous said...

The discrepancy in numbers is fairly common. Usually the underwriters eat the difference and sell them through their own retail operation. Seems like they got pretty good pricing.

Tuesday, January 31, 2012 10:08:00 AM  
Anonymous Really? said...

The underwriters eat the difference Anon? CB is referring a difference between 114mm, 125mm and 137mm. Sorry, but your explanation is off quite a bit.

This quote from Scott Kunka was also interesting:

The team marketed the bonds Monday. Market conditions were so exceptional, city finance director Scott Kunka said, that some investors were willing to pay more than face value for the bonds.

The coupons on the bonds have more to do with the price investors pay than *market conditions*. A city finance director should understand this. I hope he in not implying that bonds are typically sold at par.

Wednesday, February 01, 2012 12:48:00 AM  
Blogger C. Briem said...

From my Lehman days I did choke a bit on reading that quote. Scarier is that nobody probably called him on it since it sounded so good.

Given that rates on munis are so low right now.. they better had gotten a good deal on these.

and my main point on the different numbers is that I do agree there is some hard number for the amount that was floated.. including whatever the underwriter covered.. but part of me wonders if everyone on the 5th floor is in agreement as to what that number is.

Wednesday, February 01, 2012 12:58:00 AM  
Anonymous Anonymous said...

I think everyone except the media (and maybe Kunka) is clear on this. The face value of the issue is 125M. About 114M was sold and the remainder was retained by the two underwriters to retail through their desks. Kunka's comments just further prove his ignorance.

Wednesday, February 01, 2012 9:16:00 AM  

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