NYC Bonds

To Our Investor Community:

After what felt like a long winter, the annual celebration of Earth Day on April 22^nd was especially meaningful.  Our office marked the occasion with the release on April 20^th of an Update to our detailed Green Bond Program for New York City that was issued in September 2014. Comptroller Stringer published an op-ed on the Huffington post that discussed the benefits of NYC Green Bonds, which would finance environmentally-beneficial infrastructure in the City’s Capital Plan.

The Public Finance Bureau also enhanced our website links to bond pricing data, to provide easier access to information for our investors.  And we stayed busy in the bond markets with a $1 billion New York City Transitional Finance Authority (TFA) new money borrowing.

Update – A Green Bond Program for New York City

Green Bonds provide a vehicle to finance important capital projects that increase the City’s sustainability, resiliency and environmental health. The Comptroller’s September 2014 Green Bonds Program report described green bonds, the benefits to New York City of a green bond program, and an implementation plan that used existing City systems and resources. Since then, we have vetted our proposal with investors, securities firms and environmental advocates, testing and deepening our ideas. We gathered our findings in an Updated Report which was issued on April 20^th. The new report provides a snapshot of the maturing municipal Green Bond market and highlights the strong support and encouragement investors provided for our vision of a high quality New York City Green Bond program.

Since the release of our initial report in 2014, worldwide growth in municipal Green Bond issuance has been particularly striking – in fact, such municipal issuers represent the fastest growing sector in the Green Bond market. However, tax-exempt U.S. municipals still occupy only a small piece of total Green Bond marketplace.  As one of the largest municipal issuers in the country, New York City would help catalyze the emerging municipal Green Bond market through the visibility, liquidity and reputation of our bonds.  We are more convinced than ever that now is time for the program for New York City.

Increased NYC Price Transparency

We continuously seek new ways to provide our investors with helpful information on the City’s finances and bonds.  Recently, we updated our website to provide easier access to real time secondary market trades as well as ongoing disclosure related to the financial health and operating condition of the City credits. This data is on the MSRB’s EMMA website, and we link it for each of the City’s major bonds credits (GO, TFA, Water, Hudson Yards, TSASC and STAR).  The two new sections of our website are located in the Investor Data tab and are labeled as Price Transparency and Continuing Disclosure.

$1 Billion TFA Bond Sale

The TFA sold over a billion dollars of Future Tax Secured subordinate bonds in April.  The sale included $850 million of new money fixed rate bonds ($650 million tax-exempt and $200 million taxable) and $190 million of tax-exempt new money variable rate bonds (VRDBs).

The fixed rate bonds were sold on April 15th.  Final stated yields on the $650 million of tax-exempt fixed-rate bonds varied by coupon and maturity, ranging from 0.49% in 2017 to 3.24% in 2042 for a premium coupon bond and 3.70% in 2042 for a discount coupon bond. The tax-exempt fixed-rate bonds were sold via negotiated sale by the TFA’s underwriting syndicate led by book-running senior manager Loop Capital Markets LLC with Barclays, BofA Merrill Lynch, Goldman, Sachs & Co., J.P. Morgan, Morgan Stanley, and Wells Fargo Securities serving as co-senior managers on the transaction.

The $200 million of taxable new money bonds were sold via competitive bid.  A total of 10 bids were received with Stifel, Nicolaus & Company, Incorporated submitting the winning bid with a true interest cost of approximately 3.02 percent for a blend of maturities from 2020 to 2029.

The $190 million VRDBs were priced on April 22nd, bringing the total sale to $1.04 billion.  The daily reset bonds priced at an initial rate of .08 percent.  The VRDBs have a liquidity facilities provided by JP Morgan Chase Bank, National Association and Bank of America, N.A.

Standard & Poor’s rates the TFA subordinate lien bonds at AAA, Fitch Ratings rates the TFA subordinate lien bonds at AAA and Moody’s Investors Service rates the TFA subordinate lien bonds at Aa1.  The VRDBs also carry ratings reflecting the liquidity bank ratings.

Looking Ahead

The New York City Municipal Water Finance Authority will enter the market during the month of May. Details of the transactions will be released closer to the sale date.

Information on how to buy New York City bonds is available on the Comptroller’s website.  You can subscribe on our website to receive sale announcements and other City publications and reports.  The New York State Comptroller also maintains a website with a preliminary forward calendar for major State and City issuers.

As always, we appreciate your interest in New York City bonds.  Please contact us if you have any questions or suggestions as to how we can improve our investor communications.

Carol S. Kostik
Deputy Comptroller for Public Finance