The Philadelphia Authority for Industrial Development will sell $298.7 million in federally taxable bonds on Tuesday.

The bonds are revenue bonds maturing in April 2026. The city has a “make whole” call on the bonds. With a call normally the city would have to pay the present value of the remaining principal and interest payments at the prevailing Treasury rate plus some basis points to be announced Tuesday.

The Treasury rate would be defined as the interest rate on Treasuries issued from the redemption date to about the bonds’ planned maturity date.

Philadelphia is issuing the bonds and using the authority as a conduit.

Moody’s Investors Service rates the bonds A2, Standard & Poor’s gives it a BBB-plus with a positive outlook, and Fitch gives it an A-minus rating.

The bonds are unusual in that they share the same rating as the city’s general obligation bonds, according to Philadelphia Treasurer Nancy Winkler.

The bonds are being used to refund a portion of the authority’s taxable pension-funding bonds. Philadelphia has reached a deal with a single major owner of the zero-coupon pension bonds for the owner to sell the bonds to Philadelphia.

The city will “fund a capitalized interest account that will pay debt service, which is interest only through 2020,” S&P analyst Nicole Ridberg wrote in the credit report. “Principal and interest payments begin in fiscal 2021.”

The new bond will provide purchasers twice annual coupons until maturity in 2026.

The city is using the new bond’s proceeds to purchase a part of the Series 1999B bonds, fund capitalized interest on the bonds through April 2020, and make a deposit to the city’s employee retirement accounts. Barclays and Goldman, Sachs & Co. are the co-senior managers of the negotiated deal. Public Financial Management and Acacia Financial Group are the deal’s financial advisors. Cozen O’Connor and Ann Lebowitz, both of Philadelphia, are the bond counsel.

Standard & Poor’s gave the following factors as supporting its rating:

* “Proactive administration that has taken action to rebalance operations during a difficult recession, evidenced by surpluses in fiscal years 2010 and 2012 that eliminated a large general fund deficit.

* Fiscal oversight provided by the Pennsylvania Intergovernmental Cooperation Authority, as well as the discipline of an instituted five-year plan requirement.

* Economic diversification, despite the recession, into more growth-oriented sectors, such as health care, higher education and services, which should position the city for growth as recovery ensues.”

As offsetting factors, S&P cited:

* “Continued cost pressure related to health care and pension and the recession’s effect on the city, which we believe have pressured, and will continue to pressure, operations.

* High, in our opinion, overall net debt due, in large part, to a 1999 pension bond issuance, a significant neighborhood revitalization program and the issuance of general-fund-supported to finance the construction of two new stadiums.”

In other news, Philadelphia is set to issue $127 million in tax and revenue anticipation notes Thursday that are rated MIG-1 by Moody’s.

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