New Jersey today will begin a one-day retail order period on a $197.5 million transaction to refinance variable-rate debt insured by MBIA Insurance Corp. into fixed-rate bonds.

The deal will refinance New Jersey Sports and Exposition Authority state contract bonds, which are secured by annual appropriations from the general fund. The sale includes a current refunding of 1992 Series C variable-rate tax-exempt bonds for $162.3 million and an advance refunding of 2000 Series A taxable bonds for $31.2 million.

Merrill Lynch & Co. will price the bonds. McManimon & Scotland LLC is bond counsel and there is no outside financial adviser. The debt will not be insured.

Moody's Investors Service and Fitch Ratings assign the transaction A2 and A-plus ratings, respectively. Standard & Poor's rates the sale AA-minus.

The tax-exempt Series 2008B bonds offer maturities from 2009 through 2024 and the taxable 2008C bonds contain two maturities, with $7.7 million of debt maturing in 2011 and $1.9 million maturing in 2012, according to the preliminary official statement.

The sale is in response to MBIA's recent credit downgrades. Moody's rates the monoline A2 and Standard & Poor's assigns its AA rating. Fitch does not rate the insurer. Attached to the bonds is a standby purchase agreement with Dexia SA.

"The downgrade of MBIA results in money-market funds not being interested in buying these bonds," said New Jersey public finance director Nancy Feldman. "As a result, the bonds have been tendered to the standby bond purchase agreement provider Dexia - a large portion of them."

Attached to the 1992C bonds is a floating-to-fixed-rate swap agreement. With that derivative, the authority pays a fixed rate of 5.86% and receives 92% of SIFMA from AIG Financial Products Corp., according to the POS. The state will pay approximately $36 million from the Series 2008B and C bond proceeds to terminate that swap transaction, according to Moody's.

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