Allegheny County, Pa., will go to market this week with a $169 million sale of general obligation bonds, which will include $54 million of refunding debt.
A one-day retail period is scheduled for Wednesday, with the institutional sale the following day.
The western Pennsylvania county, whose seat is Pittsburgh, plans to use the $115 million of Series C-70 bonds to fund fiscal 2012 and 2013 capital projects.
Proceeds of the Series C-69 bonds will refund the county’s Series C-55 and C-58 general obligation bonds as well as the remaining maturities of the county-guaranteed Series 2002 A and B bonds that were issued by the Allegheny County Industrial Development Authority.
Moody’s Investors Service expects the refunding to produce a net-present value savings of $1.2 million, about 2.2% of principal outstanding.
Moody’s rated the bonds A1 and Standard & Poor’s assigned an equivalent A-plus, both affirmations and with negative outlooks.
Allegheny has $739 million in long-term parity debt.
County Executive Rich Fitzgerald was pleased with the ratings. “With so many organizations being downgraded because of the economy, these ratings are a reflection of the positive and forward-thinking fiscal plan that [we] have put in place,” he said.
But, he added: “There is much work to be done.”
Allegheny’s fund balance stands at only $5.7 million, less than 1% of its roughly $784 million operating budget for fiscal 2012.
Standard & Poor’s cited the county’s tenuous reserve in its negative outlook. The rating agency also cited continued reliance on one-time measures, though it is lessening some, and “somewhat optimistic” revenue assumptions to balance its budget.
In addition, Standard & Poor’s noted a pension funded ratio of merely 59%, although officials have taken steps of late to improve funding levels over the next few years.
Moody’s added: “The county’s financial position will continue to be challenged over the near term.”
Fitzgerald said lower borrowing costs will help the county balance its budget and could help avoid a tax increase. His administration is also looking for non-tax revenues.
Last week the county’s airport authority issued requests for gas-drilling bids for land at Pittsburgh International and Allegheny County airports.
PNC Capital Markets is book-running senior manager for the bond sale.
RBC Capital Markets is co-senior manager.
Co-managers are Boenning & Scattergood Inc., Janney Montgomery Scott LLC and Loop Capital Markets. Pepper Hamilton LLP is bond counsel. Grogan Graffam PC is representing the underwriters.
