CHICAGO — The Chicago Transit Authority named three firms — Loop Capital Markets LLC, Morgan Stanley, and UBS Securities LLC — as the joint book-running senior managers on its upcoming $1.9 billion pension bond issue.

The co-seniors include Goldman, Sachs & Co., Cabrera Capital Markets LLC, and Siebert Brandford Shank & Co.

Rounding out the syndicate are co-managers Citi, Depfa First Albany Securities LLC, Estrada Hinojasa & Co., Grigsby & Associates Inc., JPMorgan, Rice Financial Products Co., Samuel A. Ramirez & Co., and William Blair & Co. 

The CTA is working with four financial advisers on the deal, including Mesirow Financial Inc., Peralta Garcia, Columbia Capital Management LLC, and Scott Balice Strategies LLC.

Bond counsel is Katten Muchin Rosenman LLP and co-bond counsel is Burke Burns & Pinelli Ltd. and Gonzalez, Saggio Harlan LLC. Underwriters’ counsel is Perkins Coie LLP and Chapman and Cutler LLP.  Co-underwriters counsel are Charity & Associates PC and Golden and Associates. 

The $1.9 billion sale is planned before the end of June and will restructure the agency’s $3.5 billion unfunded pension and health care liabilities. The bond proceeds will allow the CTA to bring the funded ratio of its general pension plan up to a 65% funded ratio from a ratio of just 30.2% as of Jan. 1, 2007, and to establish a trust fund that will fund the CTA retirees health care benefits.

The pension financing was part of the transit bailout package Illinois lawmakers approved earlier this year that will provide the Regional Transportation Authority of Illinois and its service boards including the CTA, Metra commuter rail and Pace suburban bus service with $500 million of new revenue annually. The funds — from a sales tax increase in the region and a hike in Chicago’s tax on real estate transactions — will help shore up the struggling systems’ operating budgets.

The CTA’s finance team is still working on the pension deal’s structure and is awaiting input from its financial adviser and the underwriting team it will soon name. The agency has cited the roughly $100 million in city real estate transfer taxes it will receive as the source of repayment, but that doesn’t mean the funding stream will secure the bonds.  


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