Pennsylvania sells parking bonds to aid Harrisburg recovery plan

Hilary Russ
Tuesday, 17 Dec 2013 | 6:09 PM ET

Dec 17 (Reuters) - Pennsylvania sold nearly $289 million of parking revenue bonds on Tuesday - a critical component of the recovery plan for its cash-strapped capital city Harrisburg.

The deal, from the Pennsylvania Economic Development Financing Authority, included three series. The largest was about $119 million of bonds with a triple-B underlying rating, insured by Assured Guaranty Municipal Corp, that sold with a top yield of 5.45 percent on bonds maturing in 2044 with a 5.25 percent coupon during institutional pricing, according to preliminary pricing.

That is 131 basis points above top-rated municipal bonds on Municipal Market Data's benchmark triple-A scale, MMD analysts said. But the large penalty is in line with yields on other triple-B rated muni debt.

The bonds were sold through lead manager Guggenheim Securities. Two series of junior lien parking revenue bonds, for about $99 million and $70 million, also priced.

Harrisburg's recovery plan, approved by a court and crafted by the city's state-appointed receiver William Lynch, calls for the city to lease up to 10 public parking garages and four or five public parking lots, and for a franchise agreement for about 1,250 metered spaces.

Proceeds from the bond sale will be used to pay down some of the more than $362 million of debt incurred by Harrisburg because of its troubled trash incinerator. The mountain of incinerator debt pushed the city into bankruptcy in 2011, but its Chapter 9 filing was later thrown out after state lawmakers barred it.