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.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.