Ohio Set to Wrap Up Bulk of '08 Issuance With Various Deals

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CHICAGO - Ohio plans to come to market this week with various refunding bonds and a new-money sale that will largely wrap up the state's borrowing for the year.

The issues come after voters earlier this month approved $400 million of Clean Ohio Fund bonds. The state expects to sell those bonds starting in mid-2009 as part of Gov. Ted Strickland's $1.5 billion job stimulus plan. The jobs plan includes roughly $800 million of new-money borrowing over the next several years.

The state treasurer this week plans to sell $30 million of new-money, fixed-rate cultural and sports capital facilities revenue bonds. Part of the state's annual debt issuance, proceeds from the cultural facilities bonds will finance cultural projects and grants to organizations that sponsor projects such as historical exhibits, said Jake Wozniak, the treasurer's director of debt management.

The bonds are backed by lease payments made to the Ohio Public Facilities Commission. The bonds are rated AA by Fitch Ratings and Standard & Poor's and Aa2 by Moody's Investors Service - one notch below the state's general obligation rating. Moody's maintains a negative outlook on the state.

Merrill Lynch & Co. is senior manager on the transaction, with PNC Capital Markets LLC co-senior manager and the Huntington Investment Co. and Loop Capital Markets LLC rounding out the underwriting team. George K. Baum & Co. is financial adviser and Tucker Ellis & West LLP is bond counsel.

The transaction marks the treasurer's last sale for the year. It also comes as state Treasurer Richard Cordray leaves the office to take over the state attorney general office, which the Democrat won in the Nov. 4 election. Strickland is set to appoint a new treasurer in the coming weeks, officials said. Wozniak said it's uncertain yet whether he will remain as the treasurer's debt director.

Meanwhile, officials in the Office of Budget and Management will also consider entering the market this week with a total of $123 million of GO refunding bonds. Officials first planned to do the refunding in the beginning of this year, but held off throughout the year while various disruptions roiled the markets.

"We were first set to go to market in February and the very next week there was the auction-rate explosion," said Larry Scurlock, the state's assistant debt manager. "We've been tracking the market since then, but with the large swings in the municipal market, we just wanted to get these ready to go in case they'd be back in the money again."

The $123 million of fixed-rate refunding bonds is divided into three series. Proceeds will be used to current and advance refund outstanding debt. The state aims for a 3% savings on outstanding fixed-rate bonds and a higher return - around 4.5% - on those bonds with a longer call date, Scurlock said.

Merrill Lynch is senior manager on the transaction, and Fifth Third Securities Inc. is co-senior with five additional co-managers. Public Financial Management is financial adviser and bond counsel is Ohio-based Thompson Hine LLP.

Also this week, the Ohio Air Quality Development Authority plans to issue up to $123 million of refunding revenue bonds. The bonds will be divided into two series, including a $23 million piece that is subject to the alternative minimum tax. Banc of America Securities LLC is acting as senior manager on both issues.

The Ohio Water Development Authority is expected to issue $33 million of refunding revenue bonds, also subject to the AMT, in another transaction led by Banc of America.

With the exception of a $50 million Ohio Housing Finance Agency issue scheduled for early December, the transactions will likely mark the state's last until 2009.

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