NYC Bonds

To Our Investor Community:

We are pleased to inform you that in August, the New York City Transitional Finance Authority (TFA) undertook a complex $1.75 billion offering. We’d also like to note a historic milestone: the bi-centennial anniversary of New York City’s first municipal bond sale!

$1.75 Billion New York City Transitional Finance Authority Sale

Last month, the TFA sold and closed an issue of subordinate bonds totaling $1.75 billion that included fixed-rate new-money, fixed-rate refunding, and variable-rate new money bonds.

The TFA took advantage of the low-interest-rate environment to secure substantial savings from the refinancing, achieving budgetary savings of more than $143 million, or more than $130 million on a present-value basis with future savings discounted back to the sale date.

The fixed-rate new-money component included tax-exempt bonds, taxable Qualified School Construction Bonds (QSCBs) that will receive a 100% federal interest subsidy, and conventional taxable bonds. Both the QSCBs and conventional taxable bonds were sold via competitive bid.

As part of the $1.75 billion sale, the TFA sold $950 million Series B future tax secured tax-exempt subordinate refunding bonds. It had initially planned to offer $750 million but increased the amount of the offering due to investor demand.

The $1.75 billion sale also included $350 million daily and weekly variable-rate tax-exempt subordinate bonds placed at initial rates of 0.17% to 0.18%, and $450 million of future tax secured fixed-rate new-money subordinate bonds.

Standard & Poor’s and Fitch each rate TFA future tax secured subordinate lien bonds at AAA; Moody’s Investor Services rates these bonds at Aa1.

More details on the bond sale are available in this press release.

Proceeds from the QSCBs will be used to finance the construction, rehabilitation, or repair of public schools. The balance of the new-money bond proceeds will be used for general City capital expenditures.

New York City Marks 200th Anniversary of the First General Obligation Bond Sale

On June 8, 1812, The New York State Legislature passed an act authorizing the Mayor, Aldermen and Common Council of the City of New York to create a public fund called “The New York City Stock”. This act led New York City to become the first American city to issue General Obligation (“GO”) bonds.

Following the passing of this act, on June 29, 1812 the Common Council directed the Finance Committee and The Comptroller to open the books for a subscription with a par amount of $600,000 and a 6% coupon per annum, paid quarterly and redeemable in 14 years.  This 6% rate compares to the 4.67% blended tax-exempt bond interest rate average over the past 10 years on City GO bonds.

The June 8, 1812 act set the foundation for New York City’s taxing power and pledge of it’s “faith and credit,” which remain the bedrock of our GO credit, providing:

“…that the faith of the said The Mayor, Aldermen and Commonalty of the city of New York shall be pledged for the final redemption and payment of the stock which shall or may be created pursuant to the provisions of this act; and that all and singular the revenues of the Mayor, Aldermen and Commonalty shall be, and they are hereby, appropriated and pledged for the payment of the interest which shall become due on the said stock, and shall continue so pledged until the final redemption of the said stock; and that in case the said revenues be not sufficient to satisfy and pay the whole of the said interest, then and in that case the faith of the State shall be and is hereby pledged to pass such act or acts as shall from time to time be necessary, authorizing the Mayor, Recorder and Aldermen of the said city to raise by tax on the estates real and personal of the inhabitants and freeholders of and situate within such city, such sum and sums of money as shall and may be requisite to supply any and every such deficiency.”

Since that time, debt underwritten by the City’s taxing power (long enshrined in the State Constitution) and “faith and credit” has played a crucial role in our infrastructure development. We are proud to build on this 200-year track record.

Future Bond Sales

Information on how to buy New York City bonds is available on the Comptroller’s website. Future financings typically are announced one to two weeks before the sale date. You can subscribe here 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.

Investor Relations

I am pleased to announce that Enver Velovic has joined our office to manage investor relations, among other responsibilities. Enver can be reached at (212) 669-4543 or evelovi@comptrollernyc.com.

As always, we appreciate your interest in New York City’s 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