JobsOhio Beverage bonds put on hold by legal challenge; municipals close a touch weaker

By Sheri Kasprzak

New York, Jan. 24 - The fate of one of the week's largest offerings is now up in the air. JobsOhio Beverage System had already begun the pricing process on more than a billion in debt when a legal challenge put the kibosh on the sale.

ProgressOhio, a Columbus-based nonprofit organization, filed an appeal with the state supreme court to stop the bond deal. According to the complaint, ProgressOhio opposes JobsOhio because the bond deal would force the state to exceed its bond limit and because it would allow the state to lend public funds to a corporation.

JobsOhio, meanwhile, has filed a motion to dismiss the appeal saying that ProgressOhio as an organization will not be directly impacted by the offering and that the appeal is premature and refers to hypothetical events that might not occur in the future.

Offering has two tranches

JobsOhio Beverage System had been poised to hit the market this week with $1,526,740,000 of statewide senior-lien liquor profits revenue bonds (Aa2/AA/). The offering has been touted by Gov. John Kasich as a way to create jobs in the state.

The deal included $423,055,000 of series 2013A tax-exempt bonds and $1,103,685,000 of series 2013B taxable bonds.

Proceeds from the sale will be used to grant the system exclusive rights to operate a liquor enterprise and provide additional working capital.

J.P. Morgan Securities LLC and Citigroup Global Markets Inc. are the senior managers for the deal.

Munis close out weaker

In the broader muni market Thursday, yields were somewhat weaker along with Treasuries. Secondary activity picked up, but some major names from the week were seen trading cheaper, said traders.

"There's an overall cheaper tone this afternoon," one trader said.

"Treasuries are off, but we're also getting some impact from those Washington [G.O. bonds]. They're definitely coming cheaper [in secondary]."

The state came to market Wednesday with the four-tranche offering. The state sold $1.4 billion of the general obligation bonds in a deal that was upsized from $1.23 billion.

N.J. Economic bonds price

The week's largest offering priced Thursday. The New Jersey Economic Development Authority came to market with $2,253,495,000 of school facilities construction refunding bonds, said a pricing sheet.

The offering included $1,629,710,000 of series NN bonds, $243.27 million of series OO bonds and $380,515,000 of series I Sifma index bonds.

The bonds (A1/A+/A+) were sold on a negotiated basis with Bank of America Merrill Lynch as the senior manager.

The series NN bonds are due 2018 to 2031 with 2% to 5% coupons.

The series OO bonds are due 2015 to 2018 with 0.857% to 1.648% coupons, all priced at par.

The series I bonds are due 2025 and 2027 to 2028. The full pricing terms for the series I bonds were not immediately available Thursday.

Proceeds will be used to refund existing bonds to reduce the authority's variable-rate debt.

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