BRADENTON, Fla. - Huntsville, Ala., tomorrow expects to price $151.7 million of new and refunding general obligation warrants after getting a boost to triple-A from one rating agency.

The negotiated sale is expected to price as $81.5 million of Series 2009A warrants and $70.2 of Series 2009B warrants, all with 20-year maturities.

Proceeds of the Series 2009A warrants will be used for new capital projects in the northern Alabama city, including sewer system improvements, and for refunding approximately $39 million of 1998 A and B warrants.

The Series 2009B warrant proceeds will be used for public school capital improvements and for refunding $13 million of Series 1998C and D warrants.

Collectively, the current refundings do not extend maturities and are projected to reap more than 5% in present-value savings, or about $2.5 million, subject to market conditions, said the city's financial adviser, Phil Dotts with Public FA Inc.

The deal is expected to include serial and term bonds.

However, the exact structure was still being reviewed yesterday for possible changes that would ensure the deal is attractive to retail investors, according to Dotts.

"There will be some retail priorities for both Alabama and national investors," he said. "We're working with the underwriters on that now."

Dotts said he believed the deal would be helped by the city's high ratings, and the fact that the city now has the only natural AAA rating in Alabama from Standard & Poor's. The deal was rated Aa1 by Moody's Investors Service.

"The combination of triple-A and Aa1 is a pretty strong testament to the management and economic base of the issuer," Dotts said. "The underwriters anticipate strong interest in the sale, subject of course to the whims of the market."

Standard & Poor's said its upgrade to AAA from AA-plus reflected Huntsville's strong management practices and the expanding and diversifying local economy, which the rating agency expects will continue in the recession.

Other credit pluses include the city's above-average wealth and income levels, below-average unemployment rates, solid financial performance, below-average debt levels, and a diversifying property tax base coupled with some dependence on the military, aerospace, and electronic industries.

"Huntsville's management practices, once considered 'good' under Standard & Poor's Financial Management Assessment methodology, are now considered 'strong' due to the city's adoption of a comprehensive debt management policy and improving financial projections," said a report by analyst Edward McGlade.

Huntsville's $17.98 billion tax base, which has grown an annual average of 8.1% since 2003, is expected to continue to benefit from a diversified local economy and significant government presence, anchored by Redstone Arsenal and NASA's Marshall Space Flight Center, said a report by Moody's analyst Christopher Coviello.

Both rating agencies said the also city is benefiting from the most recent Base Realignment and Closure Commission process that is expected to bring an estimated 4,700 military and civilian jobs to the region.

This week's offering is being co-managed by Morgan Keegan & Co. and Joe Jolly & Co. Other underwriters participating in the transaction are Synovus Securities Inc. and Wachovia Bank NA.

Bond counsel is Bradley Arant Boult Cummings LLP, formerly Bradley Arant Rose & White LLP.

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