CHICAGO — Chicago enters the market with $270 million of second-lien wastewater revenue bonds Thursday in a deal to raise funds for the city’s ramped-up efforts to upgrade its aging sewer systems.

Though much of the news stemming from the city’s general credit has been negative, the enterprise system’s $1.3 billion of debt received a boost from a shift in outlook from Fitch Ratings to positive from stable due to improving debt-service coverage ratios following rate hikes.

Ramirez & Co. is the senior manager with Acacia Financial Group and Peralta Garcia Solutions serving as advisers and Schiff Hardin LLP and the Hardwick Law Firm LLC acting as bond counsel.

The bonds mature serially from 2014 to 2037 with a term bond in 2041, market participants said.

The city will face little competition for market attention this week but still faces an interest rate penalty, primarily due to its location in the struggling state of Illinois. Initial pricing scales show the paper will offer yields about 75 basis points over the Municipal Market Data triple-A scale, a penalty of about 15 to 20 basis points over similar credits.

“The city pretty much owns the market this week,” said Thomas Spalding, senior investment officer at Nuveen Investments in Chicago. The extra yield for a solid enterprise-system credit also should contribute to its appeal.

Moody’s Investors Service affirmed its Aa3 and stable outlook on the second lien debt and Standard & Poor’s affirmed its A-plus and stable rating. The bonds are secured by net revenues of the system after operations and maintenance expenses and debt service on $44 million of first-lien bonds are paid. Sewer rates are set as a percentage of water rates.

In its report, Fitch attributed its improved outlook to the 2012-2015 package of rate increases won by Mayor Rahm Emanuel from the City Council last year that will raise rates by 90% from 2011 levels and will still remain at a competitive level with other large markets.

“The rate package, along with approved inflationary escalators for 2016 and beyond, demonstrate a significant commitment by the mayor and City Council to the fiscal health and operating performance of the system,” Fitch wrote. “Improved financials that are similar to projected results would be viewed as a material enhancement to the system’s financial profile.”

The improving debt-service coverage marks a turnaround from recent years as coverage on both the city’s water and sewer bonds was strained. Coverage in 2011 was 1.2 times but is expected to rise to 1.5 times this year and exceed 2 times by 2015. With additional funds available for pay-as-you-go financing the city expects to bolster reserve balances.

One risk is that city and customer conservation efforts could reduce projected operating revenues. Other challenges include high leverage.

Proceeds of the sale will help finance the city’s five-year $1.1 billion capital program with projected future issuance of about $300 million every two years. The system operates about 4,500 miles of sewers that serve 2.7 million residents transporting wastewater to treatment facilities managed by the Metropolitan Water Reclamation District of Greater Chicago.

Moody’s said its stable outlook “is based on our expectation that the system’s historically narrow debt-service coverage will improve due to the City Council’s recent approval of sizeable, multi-year rate increase. The outlook also incorporates our belief that debt levels should remain elevated, notwithstanding plans to increase the use of pay-go financing of capital projects.”

All members of the underwriting team are minority-owned or women-owned businesses and one is a certified disabled-veteran owned firm. The advisers are also women-owned firms and one of the two bond counsel are minority-owned.

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