CHICAGO — Illinois yesterday posted the new underwriting, financial advisory and legal firm pools it will draw from on bond deals over the next two years during which a surge of borrowing is planned to support the fiscal 2010 budget and fund a $31 billion capital budget.
The term for the new lists of qualified firms to work on general obligation, sales-tax backed Build Illinois and competitive certificate transactions runs through June 30, 2011. A team of state finance, procurement and other officials reviewed the qualifications submitted by firms in early July.
The state selected nine firms that represent a mix of Wall Street, Chicago-based, and minority-owned firms to serve as senior manager or in any role on a state deal: Barclays Capital, Cabrera Capital Markets LLC, Citi, Goldman Sachs & Co., JPMorgan, Loop Capital Markets LLC, Mesirow Financial Inc., Morgan Stanley and William Blair & Co.
Another nine firms were qualified on the next tier of firms to serve as a co-senior or co-manager. Sixteen more were qualified as co-managers.
The state selected six advisory firms: A.C. Advisory Inc., Acacia Financial Group Inc., First Southwest Co., Peralta Garcia Solutions, Public Resources Advisory Group, and Scott Balice Strategies.
Scott Balice was one of three firms that had been providing advisory services to the state since former Gov. Rod Blagojevich took office in 2003, along with Mesirow and D.A. Davidson. Mesirow was elevated to the ranks of senior manager as the firm is pushing to increase its banking business while D.A. Davidson’s adviser to the state, William Morris is retiring.
A total of 19 law firms were qualified to serve as bond counsel and underwriters’ counsel.
Illinois debt manager Phil Culpepper said no assignments of firms to individual borrowings have been made yet. The state plans several competitive transactions the coming months, including a $1 billion cash-flow borrowing, $300 million to $400 million of general obligation bonding to finance capital projects, and a smaller Build Illinois transaction.
The negotiated transactions coming up in this year include the refunding of up to $1.7 billion of GO debt, another $500 million of Build Illinois debt and a $3.4 billion pension obligation issue.
The surge in borrowing is planned as Illinois finance officials are watching how outstanding state debt trades in the secondary market to gauge the impact of a downgrade earlier this week on interest rates. Fitch Ratings downgraded its rating on $19.4 billion of state GOs two notches to A while Moody’s Investors Service has the state’s A1 credit on its negative watch. Standard & Poor’s rates the state AA-minus.
In other state borrowing news, Gov. Pat Quinn this week signed legislation that puts the state’s moral obligation pledge behind as much as $3 billion of bonding to support so-called clean-coal and renewable energy projects through the Illinois Finance Authority.
“Illinois leads the way at protecting our environment while developing new green jobs for the 21st Century,” Quinn said at the bill-signing ceremony. “This legislation boosts investment in clean energy and sustainable practices that reduce our carbon footprint while generating greater employment opportunities.”
The state had on its books a $3 billion program for clean-coal projects, but the new legislation extends its focus to include a broader array of projects to support the development of wind power, biodiesel and other renewable sources of energy.
The revised legislation was also clarified to support the IFA’s position as one of eight state authorities named by the U.S. Energy of Department to participate in a pilot program to assist in developing underwriting criteria for federal loan guarantees. The federal stimulus expanded the scope of the Energy Policy Act of 2005 to provide as much as $100 billion in loans nationwide.