Illinois offers $1.4 billion in competitive sale; Maryland Transportation to sell $425 million

By Sheri Kasprzak

New York, Dec. 5 - Despite recent turmoil in the competitive marketplace, the state of Illinois said Friday it plans to move forward with a whopping $1.4 billion sale of series 2008 general obligation certificates.

The sale is set for Thursday with Scott Balice Strategies as the financial adviser.

The deal includes $400 million in certificates due April 24, 2009; $600 million in certificates due May 25, 2009; and $400 million in certificates due June 24, 2009.

Proceeds will be used to meet capital requirements during the timing between the disbursement and receipt of budgeted funds in 2009.

Illinois' venture into the competitive market follows the Port Authority of New York and New Jersey's failed $300 million competitive sale of consolidated notes on Wednesday.

"We have been watching the market closely and feel that, given the maturity sizes and duration of the notes, that the state will receive strong bids," said Katherine Ridgway, press secretary for the Illinois Governor's Office.

"We have already seen strong interest from the usual players. The state's transaction is different from the Port Authority of New York and New Jersey offering since that transaction was a taxable and our offering is tax-exempt, and the investing base is much different."

The move to sell the G.O. certificates comes at a time when many issuers are scaling back their competitive sales. The municipals market in general is bursting at the seams with upcoming deals. So many offerings are getting scheduled, in fact, that market insiders have said there just aren't enough investors for all the deals.

Pennsylvania cut the size of its planned $600 million sale of G.O. bonds in half. Miami-Dade County in Florida is also considering cutting its $350 million sale of G.O. bonds. That decision will be made this week, and the deal may be cut to as low as $100 million.

Illinois sale to help deficit

The Illinois bonds are being issued, the governor's office said Friday, in response to the state's $2 billion budget deficit for fiscal year 2009.

"Unfortunately, the national recession has negatively affected Illinois' revenue sources and cash flow," said Illinois governor Rod Blagojevich in a statement.

"Especially in this poor national economy, Illinois needs to make sure that we can pay the businesses that provide the state with goods and services which help families in these tough times."

Maryland Transportation to sell $425 million

Meanwhile, the week is already gearing up to be a busy one, with billions in sales planned as issuers make a mad dash to get their bonds sold before the end of the year.

Heading up the negotiated offerings for the week is the Maryland Transportation Authority, which is scheduled to price $425 million in series 2008 grant and revenue anticipation bonds Thursday, according to a preliminary official statement.

The bonds will be sold on a negotiated basis with Citigroup Global Markets and Merrill Lynch & Co. as the lead managers.

The bonds are due from 2010 to 2020.

Proceeds will be used for construction and equipment of the Intercounty Connector, an 18-mile, six-lane toll highway.

NYC G.O. sale ahead

Also coming up this week, New York City is slated to price its previously announced $308 million in series 2009G general obligation bonds Tuesday, according to a sales calendar.

The bonds will be sold through senior manager J.P. Morgan Securities Inc.

The bonds are due 2010 to 2035.

The sale includes $300 million in series 2009G-1 tax-exempt bonds and $8 million in series 2009G-2 taxable bonds.

Proceeds will be used for capital purposes.

Michigan G.O. notes to price

Looking a bit further ahead, Michigan plans to sell $500 million in series 2009B G.O. notes, according to a preliminary official statement released Friday.

The offering is one of a few short-term note sales announced recently. These offerings, said one sellside source reached Friday, may be more appealing to investors who want to limit the risks associated with longer-term offerings.

"It's a rough time for investors," said the sellsider. "If you've got a one-year or even nine-month maturity, it's less risky than going out for 30-year bonds. I'd say investors are putting their money with safer investments now and these might be more attractive."

The Michigan notes will be sold on a negotiated basis with Goldman, Sachs & Co. as the senior manager.

The notes are due Sept. 30, 2009.

Proceeds will be used for current expenses.

Massachusetts is also coming out with an offering of short-term notes. The commonwealth plans to price $325 million in series 2009B G.O. bond anticipation notes, according to a preliminary official statement released Friday.

The notes will be sold on a negotiated basis with Goldman, Sachs & Co. as the lead manager.

The notes are due Sept. 30, 2009.

Proceeds will be used for current expenses.

Philadelphia to sell G.O.s

Also coming up, Philadelphia is expected to sell $184.785 million in series 2008B G.O. bonds during the week of Dec. 8, a preliminary official statement said Friday.

The bonds (Baa1/BBB/BBB+) will be sold on a negotiated basis with Morgan Stanley & Co. Inc. as the senior manager.

The bonds are due 2009 to 2018 with term bonds. The exact maturities of the term bonds have not yet been determined.

Proceeds will be used to reimburse the city for capital projects.

MIT offering ahead

Moving to other upcoming deals, the Massachusetts Health and Educational Facilities Authority plans to price $275 million in series 2008O revenue bonds for the Massachusetts Institute of Technology, according to a preliminary official statement.

The bonds will be sold on a negotiated basis with Barclays Capital and Morgan Stanley as the lead managers.

The maturities for the deal have not yet been set.

Proceeds will be used for construction, acquisition and equipment of a graduate residence facility, a six-story building for the School of Architecture and Planning, a media laboratory, a six-story facility for the Sloan School of Management, a three-level underground parking garage, as well as upgrades to existing facilities.

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