Bond sales take to the Net

A regional river authority in Texas has used the Internet to sell $97.7 million in long-term municipal bonds for capital projects and debt refinancing.

The Lower Colorado River Authority recently accepted an offer from Bear, Stearns & Co. Inc. for a 5.17 percent interest rate after a financial services Web site attracted nine bidders to its offering. The bond sale was conducted through the Thomson Municipal Market Monitor (www.tm3.com), a Web site managed by the Thomson Financial Municipals Group.

Bear, Stearns will underwrite the bonds and sell them to investors.

For its first online bond sale, LCRA developed the offering in-house and distributed the prospectus electronically, saving time and about $75,000 compared with traditional bond transactions, LCRA officials said.

"It allowed us to spend more time working on the deal itself rather than working on a publication schedule," said Brady Edwards, funds manager for the finance department.

LCRA provides electricity, water, wastewater treatment, flood management, park operation and economic development services in the lower Colorado River basin of central Texas.

Most of the bond sale proceeds will be used to refinance existing debt, and $15 million will be used for water and wastewater utility construction projects.

In the past couple of years, state and local governments have started to go online to raise bond money, said Heather Bailey, the LCRA's deputy chief financial officer and CIO. "It's made it much more feasible and efficient to do it" with less help from investment houses, she said.

"We will certainly consider using the Internet for financial transactions in the future," John Meismer, LCRA's chief financial officer and deputy general manager, said in a statement.