CHICAGO — The new administration in Cook County, Ill., has picked its first bond team, relying almost exclusively on locally based and minority-owned firms.
The administration submitted the finance team for approval to the county Board of Commissioners Tuesday morning. The board is expected to vote on the ordinance July 27. The bill also authorizes the county to refund up to $900 million of general obligation bonds over the next two years to achieve budget savings. Cook has $3.5 billion of outstanding debt.
Pending full board approval, the county tapped William Blair & Co. as senior manager and Cabrera Capital Markets LLC as co-senior manager. Co-managers are BMO Capital Markets, Goldman Sachs & Co., Mesirow Financial Inc., Loop Capital Markets LLC, Melvin & Co., and Podesta & Co. All of the firms with the exception of Goldman are based here and Cabrera, Loop and Melvin are also certified minority-owned firms while Podesta is women-owned.
New board president Toni Preckwinkle is sticking with a longtime county adviser — A.C. Advisory Inc. — though the county may hire another firm down the road, according to chief financial officer Tariq Malhance.
Bond counsel is Chapman & Cutler LLP and co-bond counsel is Sanchez Daniels & Hoffman LLP. Underwriters’ council is Ungaretti & Harris LLP and Charity & Associates PC is co-underwriters’ counsel.
“Experience is mandatory, of course, and we prefer companies based in Chicago,” Cook chief financial officer Tariq Malhance said in an interview Tuesday.
A total of 48 firms responded to the county’s request for qualifications, and the county’s procurement office whittled that list down to 31 firms deemed qualified.
“We’re introducing something that looks unlike anything the county has seen before in terms of local and minority participation,” said Kurt Summers, chief of staff to Preckwinkle, who won the spot last year.
The county expects to head to market “full speed” with the refunding deal — likely in September — once it wins board approval for the team and the transaction, according to Malhance.
The size of the upcoming deal remains uncertain; the county may opt to restructure most of the debt at once or over the next two years. The finance team will help determine that, Malhance said.
The ordinance allows the county to use the team for the next two years for refunding transactions, but if it wants to borrow new money it must return for new board approval. The county has the flexibility to bring in new firms from the pool of 31 or drop the current firms under the measure, officials said.
Over the next two weeks, the administration will release the county’s 2010 audit as well as preliminary 2012 budget in addition to trying to win board approval for the bond transaction and team. Officials plan to meet with the rating agencies after that. “It’s going to be a busy month — no one can take vacations,” Malhance joked.
The current 2011 budget relies on $85 million in savings generated by restructuring some of the county’s debt and pushing off $87 million of debt service payments due in 2011.
The county also plans to restructure $92 million of payments scheduled for 2012 and 2013.
Malhance said the county’s market reception will likely be boosted by the Illinois Supreme Court decision Monday upholding the state’s $31 billion public works program and the funding sources established to repay the borrowing.
“That win is going to help us a lot,” Malhance said. “There is still going to be an Illinois impact, but it going to be a lot less.”
Moody’s Investors Service in mid-June downgraded Cook’s rating to Aa3 from Aa2 in part because of a $90 million accounting error that analysts said aggravated an already challenged fiscal position. Standard & Poor’s recently affirmed its AA rating with stable outlook on the county. Fitch Ratings also maintains a AA rating and stable outlook on the issuer.
