*** UPDATE *** Despite all the hoopla during the past few months, Illinois got a pretty good price. From a press release…

The winning bid for the $450 million Series 2013 A tax-exempt bonds went to Bank of America Merrill Lynch with a bid of 3.92%. This bid is 68-to-145 basis points over the corresponding AAA-rated municipal index. This rate matches the 20-year-low rate of 3.92% that Illinois received on a $525 million in tax-exempt bonds in its last competitive sale January 11, 2012.

The winning bid for the $350 million Series 2013 B taxable bonds also went to Bank of America Merrill Lynch with a bid of 4.97%. This bid is 97-to-245 basis points over the corresponding U.S. Treasury rates. This is better than the 5.29% rate the Illinois received on its last offering of $275 million of taxable bonds, also on January 11, 2012.

Nine banks submitted bids on each offering Tuesday.

“While we are gratified by the attractive low all-in costs, the state continues to pay a significant penalty for its failure to address the shortfall in its pensions,” Illinois Director of Capital Markets John Sinsheimer said.

“Gov. Quinn has warned the General Assembly on many occasions that investors have told us we need to rein in our pension costs and that until we do, they would command a higher price for Illinois’ bonds,” Sinsheimer said. “Today’s rate is a direct result of the General Assembly’s failure so far to pass a pension reform bill. The good news is that members of the general assembly appear to be moving in that direction, passing several promising component bills in March.

“These bonds will help fund critical capital projects — roads, rails and schools — that might otherwise have to shut down. It will keep Illinoisans employed,” he said.

The state was advised by Public Resources Advisory Group with Mayer Brown and Burke, Burns and Pinelli as co-bond counsel.

[ *** End Of Update *** ]

* After a months-long delay, Illinois is about to sell a bunch of bonds…

With nearly $500 million in spring transportation projects planned, Illinois will sell $800 million of debt Tuesday with the hope that buyer demands for steeper interest rate penalties have softened after a two-month delay in the state’s first bond offering of the year.

The state will sell the general obligation bonds competitively through PARITY. Mayer Brown LLP and Burke Burns & Pinelli Ltd. are bond counsel and Public Resources Advisory Group is advising. Ahead of the sale, rating agencies affirmed the state’s ratings. The deal offers $450 million of tax-exempt paper and $350 million of taxable securities.

Proceeds will finance capital development, school building, and transportation projects included in the state’s ongoing $31 billion Illinois Jobs Now program. Gov. Pat Quinn announced $486 million in road and bridge projects last week. Capital fund coffers are running low. “Illinois has a world-class transportation system and we are making it even stronger by carrying out one of the largest spring construction programs ever,” Quinn said.

The deal comes after a series of downgrades due to the state’s massive unfunded pension obligations and bill backlog of up to $9 billion.

* And things are looking upbeat…

Buyers demand 1.3 percentage points of extra yield on 10-year debt from Illinois and its localities, close to the smallest since February 2011, data compiled by Bloomberg show.

That spread will be put to the test [today] when the state offers its first issue since Standard & Poor’s cut its rating to A-, six levels below AAA.

Friedland and Wendy Casetta at Wells Capital Management said the state’s 10-year general-obligations will probably price to yield about 1.5 percentage points more than AAA munis, about where they’re trading in the secondary market. Both said they would consider adding the debt.

“We don’t expect to see them go below A-,” said Casetta, who helps oversee $32 billion in munis for Wells Capital in Menomonee Falls, Wisconsin. “We’ve been big buyers of Illinois debt in the past, and we’ll continue to support the state, particularly now that they’re trying to do the right thing.”

Keep your fingers crossed, unless, of course, you’re one of those folks who’d like to see a major crash.

* Related…

* CTBA: The Illinois State Budgetand Tax Primer

* Wheeler: Legislature should work smart, not just hard, on the pension fix

* Downstate schools shorted in state funding, senators say

* Illinois seeking to hire more tax fraud investigators

* Bob Williams: Boeing serves as pension example for Illinois lawmakers

* Editorial: Fire insurance tax warrants review at state level