ATLANTA - A $349 million deal sold for the Louisville Arena Authority in Kentucky closed on Wednesday despite earlier concerns that it might fall victim to the credit market crisis.

The Kentucky Economic Development Finance Authority sold the bonds last month to build an arena for the University of Louisville's men's and women's basketball teams. The deal had been in the works for years with supporters citing the economic benefits the arena is expected to have on downtown Louisville.

Officials decided to delay the deal from July because of a negative rating action taken by Moody's Investors Service against Assured Guaranty Ltd., the insurer of the debt. Moody's put the Aaa rating for the insurer on watch for possible downgrade because of "elevated risks with the financial guaranty market" and other factors. The agency later removed the insurer from its watch list and assigned an underlying Baa3 rating to the deal.

Assured Guaranty released a statement on the deal yesterday.

"The LAA benefits from the initial cost savings on these bonds, while investors benefit from the enhanced secondary market liquidity provided by our guaranty as well as the company's extensive due diligence, structuring expertise and bondholder representation," said Bill Hogan, senior managing director of Assured's public finance group.

The deal included $292 million of fixed-rate tax-exempt Subseries 2008A-1 bonds and $27 million of fixed-rate capital appreciation Subseries 2008A-2 bonds. The rest were taxable bonds, including about $10 million of subordinate bonds. The current interest tax-exempt bonds offered yields as high as 6.22% for those maturing in 2042.

Goldman, Sachs & Co. was the book-runner while Stoll Keenon Ogden PLLC was bond counsel.

The bonds are secured by annual payments from the Louisville/Jefferson County Metro Government, a consolidated local council representing all of Jefferson County, incremental state of Kentucky property and sales tax revenue, and other arena revenues such as naming rights, advertising, rentals, ticket surcharges, and concessions.

When finished in 2010, the arena will be a 22,000-seat multi-use facility with the primary tenant being the University of Louisville's men's and women's basketball teams.

Assured also announced a "significant increase in new issue U.S. public finance transactions insured by the company in August 2008, despite the decline in insured U.S. public finance bonds marketwide."

The company said it insured 58 new issue U.S. public finance transactions for approximately $1.3 billion in par insured in August 2008 compared to 10 deals for $220 million of par in August 2007. It said its new issue U.S. public finance market share for August 2008 was 59.3%.

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