Issuer officials who said Treasury's final issue price rules are a vast improvement over earlier proposals nevertheless raised concern that they might discourage competitive sales of bonds or create problems for issuers if underwriters run afoul of the rules.

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CHICAGO -- Hours after the third Michigan issuer pulled a bond deal from a market still grappling with Detroit’s bankruptcy, a spokesman for Gov. Rick Snyder said the governor is aware of investor concerns, but believes the state remains filled with “smart, sound investments” for bond buyers.

Saginaw County decided to delay a $61 million taxable pension obligation bond deal set for Thursday. The underwriter, Fifth Third Securities, said the yields it would have taken to get the deal done were too high for the issuer, and that it will look to bring it back to market later. It was set to be the first sizable negotiated offering to come to market since Detroit filed for bankruptcy July 18. Instead, Saginaw became the third issuer in two weeks to opt to pull or postpone a deal. Genesee County last week pulled a $54 million bond deal, and the city of Battle Creek decided to shift a $16 million sale to the day-to-day calendar.

A spokesman for Snyder told The Bond Buyer that the governor is aware of the rocky market, but sought to downplay the significance of the delays.

“We acknowledge there are concerns out there, though this kind of bond timing generally happens on a regular basis anyway and ultimately it should all work out,” Snyder’s spokesman Sara Wurfel said in an email to the Bond Buyer. “We believe ratings agencies should look at each entity individually and judge them on their own credit rating and history.”

Michigan is home to nearly 650 local governments that carry above-investment grade ratings, Wurfel wrote.

“There continue to be an abundance of sound, smart investments to make in Michigan and our local communities,” she said. “Michigan’s fiscal house is in order and sound, and the state has taken tremendous steps to now have truly structurally balanced budgets.”

Detroit is an “incredibly unique situation” among the state’s local governments, burdened by $18 billion of debt, and Snyder believes its historic Chapter 9 filing is the only way to get the city back on solid footing, Wurfel added.

“The governor is continuing to be visible and vocal about this issue and answer all questions about why this was the last viable option for the city,” she wrote, adding that the state is in regular contact with the credit ratings firms as well. Genesee County and Battle Creek’s deals featured general obligation bonds, a target of particular concern to the bond market after Detroit emergency manager Kevyn Orr proposed treating the city’s general obligation bonds as unsecured debt.

Saginaw was set to be the first government to bond to cover its unfunded pension liabilities, a move authorized last year by a new state law.

Several other issuers are eying the option, and were watching Saginaw to see how the deal priced.

Triple-A rated Oakland County told The Bond Buyer this week it still plans to bring a $300 million retiree health care obligation refunding deal to market in September, betting that its credit quality will trump its location next to Detroit.

The triple-A rated town of Bloomfield, a suburb of Detroit, is still on track to sell $85 million of its own taxable pension obligations pending state approval, the city’s treasurer, Dan Devine, said in an interview Thursday morning. “We’re still proceeding forward, and we’re hopeful that because of our triple-A bond status, that we won’t have any glitches along the way.”