CHICAGO -Hennepin County, Minn., enters the market today with $120 million of second-lien, fixed-rate revenue bonds, its second of three financings that will raise the $350 million needed to finance the public's share of the Minnesota Twins' new ballpark.

The county held a retail order period yesterday and today will hold the institutional pricing, Hennepin chief financial officer David Lawless said yesterday. The 20-year bonds mark the first use of a second-lien backing of a county sales tax.

Merrill Lynch & Co. is the senior manager. Piper Jaffray & Co., RBC Capital Markets, and Wells Fargo Brokerage Services LLC are co-managers. Dorsey & Whitney LLP is bond counsel. Public Financial Management Inc. is financial adviser.

The second lien received a mixed bag of ratings in the double-A category - a AA from Fitch Ratings, a AA-plus from Standard & Poor's, and a Aa3 from Moody's Investors Service.

Hennepin officials decided last year not to seek insurance.

"You just don't know what will happen. Just before the closing there could be some kind of announcement," Lawless said of the near-daily announcements of insurer credit downgrades. "It's not fair to bondholders."

The deal follows the county's March 13 competitive sale of $60 million of general obligation bonds. The deal was originally scheduled to sell on March 4, but officials opted to pull the deal because of where interest rates were at the time, Lawless said.

Hennepin eventually achieved a true interest cost of about 4.25% and officials believe they saved about $2.1 million in interest costs on a present-value basis because of the swing in rates. The county's $487 million of outstanding GOs have top marks from all three rating agencies.

Hennepin County has another $80 million still to finance and expects by the end of June to return to the market with a third-lien, floating-rate deal for the ballpark. It is seeking proposals from liquidity providers. Wells Fargo will be the underwriter and remarketing agent. The county would use surplus sales tax revenues to retire the floating-rate bonds early.

"The variable-rate structure gives us the flexibility to pay down the debt," Lawless said.

Some portion might also be sold in smaller denominations to give nontraditional retail buyers an opportunity to purchase the stadium bonds via the Internet in a sale geared towards fans of Minnesota's Major League Baseball franchise.

The county last May sold $150 million of first-lien sales tax revenue bonds for the Twins stadium. The deal received high ratings of AAA from Standard & Poor's, AA-plus from Fitch, and Aa1 from Moody's.

The new issue is secured solely by a subordinated pledge of revenue generated by the 0.15% sales tax the county began levying early last year to help finance the $517 million, 40,000-seat open-air ballpark. The price tag has risen from $480 million due to design improvements and land acquisition expenses. The team is responsible for overruns. The stadium is expected to open in time for the 2010 season.

The stadium bonds' ratings reflect steady growth in the sales tax and sound debt service coverage. Analysts said a primary credit concern is the risk posed on tax collections by the economy. The debt service coverage ratio on the senior-lien bonds is 3.8 times in the early years, falling to below three times by 2033, and then 2.3 times upon final maturity in 2037.

The projections are based on a conservative projection of 1.5% annual growth in sales tax collections through 2011, with no growth after that date. Sales taxes statewide have grown at an average annual rate of 6.4% over the last 25 years.

The Twins currently shares the Hubert H. Humphrey Metrodome with the National Football League's Minnesota Vikings and the University of Minnesota Gophers football team.


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