CHICAGO — Chicago Public Schools said it was pleased with the final 1.2% rate the district will pay on its $257 million sale Thursday of qualified school construction bonds, given a round of negative rating actions and market conditions.

The 19-year bonds that tapped the system’s 2010 allocation under the federal stimulus program paid an interest rate of 6.319, or 250 basis points over the 30-year Treasury. The direct-subsidy payment — equal to 100% of the lesser of the interest payments on the bonds or the tax-credit rate set daily by the Treasury Department — reduced the rate to 1.2%.

“We didn’t leave a penny on the table and got through a tough market, so we are pleased with deal,” said CPS deputy chief financial officer Melanie Shaker. Loop Capital Markets was senior manager.

The rate was higher than some school counterparts have paid but lower than others. Direct comparisons are difficult given the spread penalties experienced by Illinois-based issuers based on the state’s financial crisis and the fact that bond interest is subject to state income taxes.

Spreads on taxable Build America Bonds have also widened by as much as 30 basis points over the last six months and supply has mounted as issuers rush to complete deals using expiring stimulus bond programs. “The market clearly felt that the pricing was correct based on the fact that the bonds were subscribed by one times,” said Loops’s Christopher Mier.

Detroit Public Schools earlier this month sold $161 million of taxable direct-pay QSCBs at a rate of 6.645% that was lowered to 1.63% after the federal subsidy was applied. The bonds were backed by Michigan and rated double-A-minus. The Cleveland School District priced $55 million of QSCBs in September at a 5.2% interest rate that was lowered to 0.26% after the federal subsidy was applied. The bonds earned double-A ratings based on Ohio’s backing.

The Chicago Board of Education sold $125 million of BABs Wednesday at a post-subsidy rate of 4.24% in a deal led by Siebert Brandford Shank & Co. The team tried to increase the size to $250 million, but it ended up at $125 million. CPS is rated A-plus to mid double-A..

Michael Scarchilli contributed to this story.

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