PHILADEPHIA -- Institutional investors interested in buying bonds from Philadelphia's oversight authority will get a sales call this week from city advisers to bring them up to date on the status of the deal, a financial adviser to the authority said Friday.
James F. Haddon, managing director in the municipal securities group at PaineWebber Inc., said the meetings will be the first formal dialogue between potential creditors and the Pennsylvania Intergovernmental Cooperation Authority, the city's oversight board that was created in June.
Mr. Haddon said the discussions will focus on how much progress has been made on drafting both a five-year fiscal recovery plan and a cooperation agreement between the city and the board -- two requirements that must be met before the deficit bonds can be sold.
At a meeting of the authority on Friday, Mr. Haddon told board members a bond sale could take place a month after those two hurdles are cleared. Proceeds from the deal would be available about two weeks later, he said.
Samuel P, Katz, a financial adviser to Mayor-elect Edward G. Rendell, said work on the five-year plan is continuing, and he should be able to say this week how long the process will take.
The authority's bonds, which are intended to clear up city deficits of more than $200 million, were expected to have been sold by last month at the latest. But both the five-year plan and the cooperation agreement have been stalled by political and fiscal obstacles.
The city's cash emergency, however, appears to have been postponed well into next year, in part through recent high-yield, short-term note deals. Although city officials once said they would run out of cash by the end of October without proceeds of a bond sale, new cash-flow analyses show the next shortfall in the consolidated cash account will not appear until June. When Mr. Rendell takes office in January, the cash account will have more than $36 million, according to the city finance department.
Mr. Haddon said an official statement and a bond resolution were prepared in anticipation of an October bond sale, and both could be "dusted off" and updated when the authority gets a green light to sell its bonds.
Samuel G. Hopkins, another financial adviser to the authority, noted at the meeting that Moody's Investors Service has expressed concern that the bond sale continues to be delayed pending political developments in the city.
"I think we ignore that message at our peril," Mr. Hopkins said, but he declined to elaborate.