Philadelphia next Wednesday plans to refund $203.8 million of its auction-rate securities, which will eliminate all auction-rate debt from the city's portfolio.

"We're doing [the deal] as a reaction to what is going on in the market, and we wanted to react quickly and stem the problem as quickly as we could," Philadelphia finance director Robert Dubow said. He noted that the deal is "directly in reaction to the increase in the interest costs as a result of the failing auction-rate market."

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