Chicago Sales Tax Securitization Corp

Chicago went to market Wednesday with $454.37 million of STSC refunding bonds, amid heated budget talks. Goldman took down $75 million of the bonds.

Chicago Mayor Brandon Johnson is seeking City Council approval of $1.8 billion in new money general obligation bonds and $2 billion in refunding authority.

The city of Chicago and its Sales Tax Securitization Corporation won The Bond Buyer's 22nd annual Deal of the Year award for its $1.7 billion financing that addressed initiatives related to affordable housing, homelessness support services, environmental justice, and community development.

The Bond Buyer's Deal of the Year awards will mark the 22nd year it has recognized outstanding achievement in municipal finance. The event, to be held Dec. 5 in New York City, will also include the presentation of the Freda Johnson Awards for Trailblazing Women in Public Finance.

The city is offering more than $1 billion of debt under its higher-rated Sales Tax Securitization Corp., and its water and wastewater revenue credits.

"I think ESG is here to stay in our market. I think it's a natural fit with the types of infrastructure that our market finances," said MSRB CEO Mark Kim.

The city received $217 million of retail orders — a rarity in Illinois where local bonds don't benefit from state tax exemption — and interest from 11 ESG funds.

Chicago put out pre-marketing pricing scales Tuesday on its STSC new money social bonds and refunding tranches and will take retail orders Wednesday with the pricing set for Thursday.

Chicago returns to the market later this month with a deal under its Sales Tax Securitization Corp. credit that will offer the city's first social-designated bonds along with a refunding piece that includes the paydown of GO bonds through a tender.

Last week's deal, upsized to $533 million, attracted $4.5 billion of orders after positive rating news including the end of Moody's speculative grade status.

Chicago's Sales Tax Securitization Corp. will sell $150 million of social bonds next month in the city's first ESG-labeled deal.

Chicago, upgraded Friday by Fitch, will follow City Council's expected passage of a new 2023 budget next month with a new money general obligation bond issue.

The upgrade reflects the city's improving pension funding practices, commitment to a sound reserve position and ability to institute structural budget measures, Fitch said.

Chicago's captured a new low in recent history on tax-exempt spreads but the taxables, which were downsized by $500 million, faced a tougher road amid Treasury volatility.

Chicago's long-planned refinancing was led by a GO tranche priced Tuesday with spreads of 33 to 86 basis points, and follows with the Sales Tax Securitization piece Wednesday.

The tender/exchange offer is built into a more than $1 billion refinancing the city plans to price in early December.

The city’s timing is good as long as market demand for municipals, especially higher yielding paper, stays on track, municipal bond investors say.

Fitch joined Kroll and Moody's in moving Chicago's outlook to stable from negative as City Council prepares to vote on a budget and $4.4 billion in borrowing.

Refinancing savings and federal relief will fill Chicago's $1 billion 2021 hole while the city ponders how to erase a $733 million gap next year as its budget takes shape.

The budget cleared the Chicago City Council Tuesday. Rating agency and buy side reviews on the final plan will come next.