Chicago Council OKs $1.1B to Sell Before Year-End

CHICAGO - The Chicago City Council yesterday approved the proposed issuance of up to $1.1 billion of new-money and refunding general obligation bonds in a deal officials hope to price before the end of the year if market conditions continue to improve.

The city does not expect to tap the full authorization but finance officials sought extra room to include additional refunding capacity.

William Blair & Co. is the book-running senior manager. Mesirow Financial Inc. and George K. Baum & Co. are co-senior managers. The co-managers include Rice Financial Products Co., Siebert, Brandford, Shank & Co., Estrada Hinojosa & Co., and Samuel R. Ramirez & Co. Katten Muchin Rosenman LLP and Charity & Associates PC are bond counsel and Freeborn & Peters and is underwriters counsel.

While the city has not yet released structural details of the transaction, Mayor Richard Daley submitted a $6 billion 2009 budget to the council last month that relies on about $60 million from the restructuring of some existing debt - including $41 million this year and another $19 million next year - to help close a $469 million deficit. The savings likely will come from extending some maturities, although no additional details have been provided.

The Finance Department introduced the bond authorization to the council last month at the same time that Finance Committee chairman Edward Burke introduced a measure that would ban from city deals any broker-dealers who participate in the federal bailout plan but do not limit their executive's financial compensation package to $400,000. That measure remains pending before the committee, although the team selected for the proposed bond deal would not violate the proposed rules.

Chicago's $6 billion of GOs are rated AA by Fitch Ratings, Aa3 by Moody's Investors Service, and AA-minus by Standard & Poor's.

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