CHICAGO - Ohio Treasurer Richard Cordray yesterday began a statewide tour across six of the state's larger cities to encourage local retail buyers to invest in $140 million of new-money general obligation highway capital improvement bonds that will be available for purchase beginning Monday.

For the fourth year in a row, Ohio is catering the state's highest-rated bonds to retail buyers, with an emphasis on local investors. Cordray said retail sales offer the state better pricing and the chance to build a large network of local investors. He tells local buyers that in addition to the exemption from local, state, and federal taxes on interest payments, they are buying a stake in the future of Ohio when making the purchase.

The state will take retail orders April 21 through April 23. Depending on demand, an institutional sale will likely be held on April 23 to sell the remaining bonds, said Jake Wozniak, director of the treasurer's office of debt management.

The state will sell the 10-year bonds in $5,000 increments. The bonds are backed both by Ohio's full faith and credit pledge of repayment as well as a pledge of revenues generated by highway user receipts, mostly made up of motor fuel taxes. Those receipts carry a coverage level of more than 12 times, Wozniak said.

Fifth Third Securities Inc. and Merrill Lynch & Co. are co-senior managers on the deal, leading a team of 16 additional underwriters. The co-senior managers "have very good retail books," Wozniak said. "We have a 16-member sales team to give investors the most exposure."

Cleveland-based Climaco, Lefkowitz, Peca, Wilcox & Garofoli Co. and LumpkinMcCrary LLP are co-bond counsel. George K. Baum & Co. is financial adviser to the treasurer.

Proceeds from the 10-year bonds will provide financing for up to 16 capital improvement road and bridge projects across Ohio over the next 12 to 15 months.

Buoyed by the success of its past efforts to market the highway bonds to retail - 41% of last year's $180 million sale sold to retail buyers - has prompted state officials to take similar steps with other bond issues, Cordray said in a phone interview yesterday.

"This is a little bit of an experiment for the state, and since the response has been so good on this issuance, we're making a similar effort [on other issues]," he said. "We may find that they become a very consistent tool for us."

In a recent sale of revenue revitalization bonds backed by liquor profits, for example, the state sold about 40% to retail investors, Wozniak said. Officials hope retail investors will buy at least 40% in next week's sale.

"We're still finding that the credit crunch is more of a Wall Street phenomenon than a local community phenomenon," Cordray said. "We don't think the credit issues affect [local Ohio investors'] position as much. Retail makes as much or more sense in the current climate than it ever did."

Rating agencies affirmed ratings ahead of the sale. Fitch Ratings affirmed its AA-plus on the deal. Moody's Investors Service rates the bonds Aa1. Standard & Poor's rates the bonds AAA.

Meanwhile, the Ohio Department of Transportation recently announced it plans to spend up to $2.9 billion - financing more than 1,000 new projects - through the end of fiscal 2009.

As part of that plan, the state plans to sell $710 million of grant anticipation revenue vehicle bonds, backed by federal transportation grants, over the next two years, Wozniak said.


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