WASHINGTON - Triple-A rated Virginia will come to market with $265 million of general obligation bonds today and tomorrow in a negotiated deal, straying from the state's traditional competitive route in response to an unstable market and higher demand from retail investors, officials said.

"In this environment, it just seemed like maybe this was a good opportunity to involve more retail buyers," said Evelyn R. Whitley, director of debt management for Virginia's Treasury Department. "We get a lot of calls from investors who are interested in getting some of our bonds but can't because they always go institutional. This also puts some bonds in the hands of Virginia investors."

Whitley said the state will have a retail-order period today to and institutional pricing tomorrow. In competitive deals, retail investors can buy bonds only in the secondary market, and the retail-order period in a negotiated deal allows more retail investors access to higher-rated paper. Merrill Lynch & Co. is senior manager on the deal. BB&T Capital Markets, Davenport & Co., Morgan Keegan & Co., Ramirez & Co., and Siebert Brandford Shank & Co. are co-managers.

Financial adviser is Public Resources Advisory Group. Bond counsel is Troutman Sanders LLP in Richmond. Christian & Barton LLP of Richmond is underwriters' counsel.

Of the $265 million of Series 2008B bonds, Whitley said a portion will current refund $42.6 million of Series 1998 bonds. About $100 million of the GOs, which were approved by voters in 2002, will go toward continuing construction of higher education and park facilities. About $123 million of the bonds - which are backed by the full faith and credit of the state, but are repaid with revenues produced by the projects - will finance higher education facilities, Whitley said.

Moody's Investors Service, Standard & Poor's, and Fitch Ratings all gave the deal a triple-A rating with a stable outlook.

"The GO rating reflects our view of the commonwealth's strong and broad-based economy that in the past decade has grown at a faster pace than the national average," Standard & Poor's credit analyst Karl Jacob said in a statement. "The rating also reflects Virginia's strong financial position demonstrated by good reserves, long history of proactive and conservative financial management, and manageable debt burden."

All three rating agencies pointed to the state's strong financial management after finance officials responded to softening revenues and had to plug a projected $2.5 billion revenue shortfall for the remainder of the two-year, $77 billion budget.

"We also believe that, despite feeling the effects of the national slowdown, Virginia's overall economic strength and diversity of employment and good income levels in the long term offset near-term slowing of the national economy," Standard & Poor's said.

"The triple-A ratings are a testament to Virginia's fiscal strengths," Gov. Timothy Kaine said in a statement yesterday. "They also underscore the timely efforts we have made to address the impact on Virginia of the slowing national economy."

Kaine announced in early October that he would have to tap about $400 million from the state's rainy-day fund and issue $250 million of tax-exempt bonds to help plug the $2.5 billion revenue shortfall. The additional bonds Kaine proposed are not part of this deal.

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