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The Bond Buyer

New Tax Law Colors Marketing and Demand for Chicago Sales Tax Securitization

Byline: Yvette Shields

Chicago's top-rated sales tax securitization bonds required more leg work and styling to cater to post tax-reform market appetites, market participants said.

On its second outing with the Sales Tax Securitization Corp. credit, the city faced a market environment with higher yields and weaker demand compared to its inaugural sale in December, and its tax-exempt spreads widened as a result, but a one-week delay in the pricing that saw the transaction downsized and the addition of a taxable piece improved its prospects.

"The fact it got pushed meant it wasn't a slam dunk," said Matt Fabian, partner at Municipal Market Analytics. "The underwriting seemed to face some hurdles that the first underwriting didn't."

The city had planned a nearly $900 million tax-exempt issue last week -- a follow-up to the $744 million debut last December -- but held the deal citing a tougher "market tone" and investor input that prompted a look at an index-eligible taxable bond.

The city returned with $376 million of tax-exempts that priced Tuesday and $304 million of taxables that priced Wednesday.

Tim Holler