New Jersey agency seeks private placement for bond refunding.

The New Jersey Sports and Exposition Authority plans to issue $50 million of unrated revenue bonds through a private placement that will redeem securities set to mature Jan. 1 of next year.

The agency is seeking a placement agent for the issue, and officials say they have received dozens of responses to a recently mailed request for proposals.

The authority mailed the request in mid-October. The deal will mark the authority's first bond issuance since a $63 million refunding sold in December of last year!

The new deal, which has no scheduled sale date/will be used to redeem $39 million of revenue bonds and a $12 million note that were both issued to purchase the Monmouth Park racetrack, which the authority owns and operates.

For its new issue, the authority has chosen to issue bonds through a private placement "because it's the most cost-effective way for the authority to lock in relatively low interest rates," said spokesman John Samerjan.

The authority plans to appoint a placement agent at its next public meeting, scheduled for Nov. 4.

One investment banker whose firm replied to the RFP said private placements can frequently cost issuers more money than traditional bond deals. But private placements also have their advantages, the banker said.

With a private placement, the issuer can negotiate the terms of a sale with a small pool of selected bond buyers, the banker said. Private placements can be completed faster than traditional transactions, and issuers can also tailor the securities to meet investor needs, the banker said.

According to the authority's RFP, the bonds will be secured with revenues from Monmouth Park and the Meadowlands sports complex. Beginning in 1996, net revenue projections "indicate a debt service coverage of approximately 300%" on bonds already issued by the authority.

Monmouth Park and the Meadowlands, also owned by the authority, had record-setting racing revenues this summer after a dismal start this year. So far this year, bets placed at Monmouth Park have increased more than 15%. Bettors wager more than $3 million a day on races at Monmouth Park.

The authority currently has three groups of outstanding rated bonds: state contract bonds, rated A-plus by Standard & Poor's Corp. and Aa by Moody's Investors Service; sports complex senior lien revenue bonds, rated Aa by Moody's; and state-guaranteed sports complex refunding bonds, rated Aal by Moody's.

All other authority debt is either insured or refunded.

The RFP asked for the firm's experience as a placement agent, the background of professionals that will work on the transaction, fees the firm will charge, and any conflicts of interest the firm may have with the state's Sports and Exposition Authority.

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