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 The Metropolitan Pier and Exposition Authority will raise $153
million to help fund a new hotel at Chicago's McCormick Place
convention center and refund about $69.7 million of outstanding
debt.
The ongoing budget battle between Republican Governor Bruce Rauner
and the Democrats who control the legislature stymied the
authority's legal ability to transfer tax revenue to the bond
trustee for required monthly debt service deposits.
Because of the technical default, the authority's AAA rating with
Standard & Poor's and AA-minus rating with Fitch Ratings were cut on
Aug. 5 to BBB-plus, affecting more than $3 billion of bonds sold for
the expansion of McCormick Place.
Legislation appropriating the tax revenue for all of fiscal 2016 was
passed later in August, ending the default. although the lower
ratings remained in place.
In a research note on Friday, Barclays analysts said that due to the
legislation, the authority's bonds "could outperform comparable
indices over the medium term."
The deal, slated for pricing on Wednesday through Citigroup Inc
<C.N> and Cabrera Capital Markets, is structured with $133.7 million
of current interest bonds due in 2053 and $19.3 million of capital
appreciation bonds due in 2052, according to the preliminary
official statement.
The $69.7 million of refunding term bonds carry maturities in 2035,
2040, 2045 and 2052.
Altogether, U.S. muni issuers will sell $4.8 billion of bonds and
notes in negotiated and competitive offerings next week.
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The second-largest deal is also from Illinois, with the state
Finance Authority's $368 million of revenue bonds for the OFS
Healthcare System through lead manager Barclays Capital <BARC.L>.
Some proceeds will fund hospital construction and expansion, advance
refundings and termination of interest rate swaps.
As of June 30, the notional outstanding amount of the system's swaps
was $549.8 million, with a net market valuation of negative $52
million, bond documents said.
About $50 million of the proceeds will also help finance the
corporation's pension liability, which rose because of a lowered
discount rate and the use of new mortality tables to reflect longer
life expectancy.
(Reporting by Karen Pierog in Chicago; Additional reporting by
Hilary Russ in New York; Editing by Lisa Von Ahn)
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