CHICAGO — The Metropolitan Water Reclamation District of Greater Chicago has selected Public Financial Management Inc. and Gardner, Underwood & Bacon LLC as co-financial advisers for its sale next month of up to $500 million of new-money debt tapping the Build America Bond program.

The district's board was expected to approve the selections at a special budget meeting on Thursday. Treasurer Harold Downs said he expects to return to the board at its regular meeting Nov. 18 to seek approval for the underwriting team, which is still under review.

The triple-A rated water district held its request-for-proposals process last month to establish pools of senior managers and co-managers eligible for bond sales over the next three years. The pools will be selected by a group of five district officials from the treasury, finance, law, and procurement departments. The team for the upcoming sale will be selected from the pools.

"We have just finished reviewing responses to our RFP for underwriting and hope to have a team recommendation at the next board meeting," Downs said. "We have a very tight schedule in moving the bond sale along for December."

Proceeds of the sale would help finance the district's long-term capital program of more than $2.5 billion.

The pricing of the district's $600 million BAB sale in August 2009 has come under scrutiny due to profit-taking that occurred during initial secondary-market trading. The deal is the subject of a Securities and Exchange Commission inquiry and an Internal Revenue Service examination. The district responded to SEC questions in June and is in the process of responding to the IRS.

The district used A.C. Advisory Inc. and Scott Balice Strategies as advisers on the 2009 sale. Mesirow Financial Inc. was senior manager and Loop Capital Markets LLC was co-senior. Chapman and Cutler LLP and Pugh, Jones, Johnson & Quandt PC served as co-bond counsel. Downs was not immediately available to comment on the reasons behind the district's choice of PFM and Gardner Underwood to advise on the upcoming sale.

Although Downs was ultimately pleased with the 3.72% final rate on the 2009 deal after the federal government's interest rate subsidy was applied, he said in a recent interview the district would be closely monitoring the pricing scales, buyer types, and secondary trading of the upcoming sale.

Metro Water's capital program includes plant expansions and improvements, sewer upgrades, bio-solids management projects, and deep-tunnel related projects. The district spans Chicago and 128 suburbs, and is responsible for maintaining the water quality of Lake Michigan and other waterways in the region.

All three major rating agencies affirmed the district's top ratings on the deal and $1.4 billion of outstanding debt.

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.