CHICAGO -- The Illinois Housing Development Authority has chosen firms to participate in its bond deals over the next two years.

Peter Dwars, executive director of the authority, said Lehman Brothers, First Boston Corp., and PaineWebber Inc. will rotate as book-running manager and senior managing underwriter for bond issues.

The new team will begin with an estimated $135 million single-family mortgage revenue bond issue the authority plans to sell next month. that deal will be headed by Lehman Brothers, with the other two firms serving as co-senior managers, according to Mr. Dwars.

In addition, Bear, Stearns & Co.; M.R. Beal & Co.; and Dougherty, Dawkins, Strand & Bigelow Inc. were selected as co-managers for that deal and other deals during the two-year period.

About 40 firms had replied to the authority's request for proposals in July, Mr. Dwars said. For the senior manager position, he said the firms were evaluated on the basis of the job they did on earlier authority deals and their expertise with derivative products.

Mr. Dwars said that even though the selection process has ended, firms presenting innovative ideas would be rewarded with deals.

He added that the amount of bond issuance over the two years would depend on the kinds of issues that will be allowed by the federal government in the future. During the previous two years, the authority issued about $500 million of debt in deals headed by Merrill Lynch & Co. and Bear Stearns, he said.

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