News
January 2012 Monthly Public Finance Wrap Up
To our investor community,
New York City started its calendar 2012 issuance with a New York City Municipal Water Finance Authority (“NYW”) bond deal. NYW priced $400 million Fiscal 2012 Series CC and DD Second General Resolution Revenue Bonds on January 24. The bonds consisted of $350 million tax-exempt Series CC and $50 million tax-exempt Series DD. (Read the Press Release)
In order to take advantage of the steepness of the yield curve, each maturity in the Series DD bonds is designated as Refundable Principal Installment (“RPI”) bonds. The RPIs allow NYW to issue bonds with shorter stated maturities at lower yields and yet have the principal treated more favorably when calculating Adjusted Debt Service for its additional bonds test, the Rate Covenant and Debt Service Reserve Fund Requirement. Instead of having the RPI principal applied to the fiscal year of the stated maturity, the principal is assumed to amortize with equal annual payments of principal and interest over a period extending from the stated maturity through the last date on which it could have been authorized to be paid. However, NYW retains the right to redeem the RPI bonds prior to the stated maturity.
Looking ahead, February and March are expected to be heavy issuance months for NYC and its credits. You can sign up to receive bond sale notification by emails on the Comptroller’s Public Finance Investor Relations website.
Carol Kostik
Deputy Comptroller for Public Finance