NYC Bonds

To Our Investor Community:

July was a relatively quiet month for City bond sales, with just one major new offering, but financial news and a variety of reports relevant to the municipal marketplace came at a rapid pace.  This monthly wrap-up letter will not attempt to cover major national and international news stories that affect the municipal marketplace or various reports that are issued from time to time concerning government finances.  The Comptroller’s investor web site’s Relevant Links page does include links to the regulatory bodies involved in our marketplace.

July Bond Sale – $850 million New York City Transitional Finance Authority (TFA)

The City’s July bond sale captured low borrowing costs to the benefit of City taxpayers.  During the week of July 9, 2012, the TFA sold $850 million Building Aid Revenue Bonds. In the month leading up to the bond sale, both the Treasury and tax-exempt markets experienced volatility amid European sovereign concerns and the release of mixed U.S. economic data. 

However, as the sale date approached, tax-exempt yields began to fall, owing to a decline in Treasury rates and an abundance of cash coming into the market from tax-exempt investors.  The strong market tone was reflected in $465 million of retail orders for the tax-exempt bonds during the two-day retail-order period. Because of the demand, the institutional-order period was accelerated, and the TFA received more than $2.8 billion of priority orders for the remaining bonds.  The TFA took advantage of the demand for the bonds during the order period to reduce yields on all maturities. 

The 2037-term bond and the 2042-term bond ended the order period with yields lowered by 12 and 11 basis points, respectively. Yields on remaining serial bonds were adjusted downward between 1 and 7 bps, resulting in a much lower cost of funds than originally anticipated.  (Click here for the press release on the transaction.)

Comptroller’s Report on Adopted New York City Budget and Financial Plan

Comptroller Liu’s report on the adopted Fiscal Year 2013 Budget and 2013-2016 Financial Plan was released on July 23rd and is available on our website. New York City’s $68.5 billion operating budget for the fiscal year beginning July 1 and related Four Year Financial Plan were adopted June 28 and can be accessed through the Office of Management and Budget (OMB) website. The FY 2013 budget is balanced, as required by law.

Looking Ahead

The City’s next bond sale is a $1.55 billion TFA new-money and refunding issue.  The bonds being sold are Future Tax Secured Subordinate bonds, which are paid from the City’s personal-income-tax revenues and secondarily, if needed, from sales-tax revenues. Tax-exempt fixed rate bonds are scheduled to be sold during a retail order period Monday and Tuesday, August 6 and 7, followed by final fixed-rate pricing planned for Wednesday, August 8.   A variable-rate portion of the issue is scheduled to be sold later in August.  More details are available in the Press Release. 

Information on how to buy New York City bonds is available on the Comptroller’s website. Future financings are typically announced one to two weeks in advance of 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.

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