DALLAS - Denver will test market response to its new AAA rating from Standard & Poor's with roughly $120 million of general obligation debt, including the first bonds to be issued from a 2007 voter authorization.

The bonds for the $550 million Better Denver Program likely will price next week with RBC Capital Markets as senior manager. Wachovia, Robert W. Baird, and Estrada Hinojosa & Co. will be co-managers.

The upcoming issue will be the first Denver deal for Baird since the Milwaukee firm opened its office in the Mile High City this year. Its Denver public finance group has lined up other deals in Colorado, Idaho, and New Mexico.

Baird ranks 11th as a senior manager this year, working on 208 deals with a par value of $2.3 billion, according to Thomson Reuters. That's a big step up from 2007, when it ranked just 27th, working on 291 deals with a par value of $1.9 billion.

Denver was expected to receive its comprehensive annual financial report Monday, allowing the city and the county to issue a preliminary official statement for the bonds.

Standard & Poor's and Moody's Investors Service are expected to issue their ratings after the CAFR is available. But Denver finance officials expect the bonds to be rated in the top category, because Standard & Poor's upgraded the city to AAA last year.

Standard & Poor's analyst David G. Hitchcock declined to say when the rating on the upcoming bonds would be issued.

"We're waiting on the CAFRs, and we'll need some time to look at it," he said yesterday.

Moody's rated Denver's last GO debt Aa1.

Fitch Ratings affirmed its AA-plus, citing Denver's "broad and diverse economic base, strong financial management, voter support for capital programs and exemptions from statewide revenue limitations, and notable progress in funding other post-employment benefits."

The city's sensitivity to sales tax declines in the current recession is a countervailing indicator, according to Fitch analyst Jose Acosta.

"In the previous recession, Fitch noted the city's impressive containment of structural imbalances in its finances due to sound financial stewardship," Acosta wrote. "Fitch will monitor the city's overall revenue trends, sales and use tax revenues in particular, and management's response to any additional deterioration in revenues."

Denver debt administrator Margaret Danuser said that she is hoping the triple-A rating will bring a strong response from the market, and that a retail order period will precede institutional sales.

"We tend to get a lot of attention from investors in Colorado," she said. "I've been getting a lot of calls asking when we expect to issue."

The bonds will be exempt from Colorado's state income tax, as well as federal income taxes, according to co-bond counsel Shermand & Howard and Kline, Alvarado & Veio.

The upcoming issue will be the first installment of a $550 million bond program authorized by voters in November 2007, along with a 2.5 mill levy increase for capital maintenance. The bond program is not expected to increase taxes, according to valuation growth assumptions.

The 2009A bonds include $53 million to refund interim commercial paper, $25 million of new money, and $26.5 million of remaining authorization from the city's 1999 zoo improvement bond program.

The 2009B bonds will advance refund the city's series 2000 bonds.

The showcase project covered by this issue is the Denver Zoo's completion of the Asian Tropics and Predator Ridge exhibits.

Asian Tropics, which will open this year, was partially funded by a 1999 bond issue. The exhibit will offer the nation's largest bull elephant habitat, capable of housing 12 elephants with additional pens for rhinos and tigers.

The 2.6-acre site will include streams, sand pits, and mud wallows. Power for Asian Tropics will come from recycled zoo trash and animal waste.

Construction of Asian Tropics took place as several cities closed their elephant exhibits, citing ethical and financial issues. Some cities, such as Los Angeles, are planning to replace the exhibits with larger habitats where the animals can roam more naturally. Zoo managers say the zoos are designed to preserve an endangered species and build human empathy for the animals.

Predator Ridge provides a more natural setting for lions, bears, and other large mammals than was available in the previous exhibit.

Located in Denver's 330-acre City Park, the Denver Zoo is the nation's fourth most popular in terms of visitors.

With tourism slumping, Denver Mayor John Hickenlooper in April announced a major program to promote the city in surrounding states, with special deals from more than 100 businesses.

Hickenlooper also said in December that he would accelerate the Better Denver infrastructure projects as a form of economic stimulus, in keeping with President Obama's push for new construction.

"Accelerating our infrastructure projects means that the city of Denver will pump $200 million per year into the Denver economy over the next three years, stimulating spending at every level of our regional economy and helping keep people employed," Hickenlooper said. "We will also help our partners in the public and private sectors accelerate their local infrastructure projects, as well."

Denver has suffered job losses in the recession, though there are hints of improvements.

The most recent Case-Shiller housing report from Standard & Poor's listed Denver and Charlotte as the only two cities out of 20 posting modest increases in prices.

"I think we have held up better than a lot of similar-sized cities," Danuser said.

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