CHICAGO — Cook County, Ill., is expected to refund $121 million of general obligation bonds next week in what will likely be the last financing under outgoing board President Todd Stroger.

A firm pricing date has not been set.

Cook, the nation’s second-largest county, faces a fiscal 2011 deficit that could reach as high as $500 million. Part of the problem is the partial repeal of an unpopular 2008 sales tax increase that Stroger backed.

The board’s decision to cut in half the 1% increase could mean the loss of $190 million next year. Cook’s annual budget is about $3 billion. Longtime Chicago City Council member Toni Preckwinkle beat Stroger in the February primary — in a win some attribute to the sales tax increase — and faces Republican Roger Keats and Green Party candidate Tom Tresser in November.

Morgan Stanley and Rice Financial Products Co. are lead managers on the $121 million refunding transaction. Cabrera Capital Markets, Citi, JPMorgan, and William Blair & Co. round out the underwriting team. Chapman and Cutler LLP and Pugh, Jones, Johnson & Quandt PC are co-bond counsel. Gardner, Underwood & Bacon and Peralta Garcia Solutions are co-financial advisers.

Fitch Ratings assigned the debt a AA rating with a stable outlook. Standard & Poor’s and Moody’s Investors Service had not released ratings on the bonds by Wednesday, but rate the county’s GO debt AA and Aa3, respectively.

Cook has just under $3.6 billion of outstanding debt. Debt service is expected to rise to $114.3 million in 2011 from $78 million this year, and reach a maximum of $208.6 million in 2030, according to bond documents. County officials project a deficit of $60 million by the end of fiscal 2010, but recently said it could reach as high as $500 million in 2011.

“Fitch believes the 2009 roll-back of a portion of the 1.75% sales tax increase implemented in 2008, the continued volatility [of] revenue streams, and the rising expenditures associated with retiree benefit costs and the health delivery system will put downward pressure on county operations,” Fitch analyst Ann Flynn wrote in a release on the upcoming borrowing.

The board passed new ethics measures Wednesday prohibiting bankers and lawyers who do business with the county from making campaign contributions to county officials or candidates.

Municipal Securities Rulemaking Board rules ban most contributions by public finance bankers to issuer officials who hold sway over the awarding of bond business.

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