News
July 2022 Quarterly Public Finance Wrap-Up
New York City Transitional Finance Authority Announces Sale of $564 Million of Building Aid Revenue Bonds
On July 21st, the New York City Transitional Finance Authority (“TFA”) sold approximately $564 million of Building Aid Revenue Bonds (“BARBs”), consisting of around $492 million of tax-exempt and $72 million of taxable fixed rate bonds. Proceeds from the offering will be used to redeem other BARBs at or prior to maturity to secure approximately $74 million in total debt service savings.
The tax-exempt bonds were sold via negotiated sale by TFA’s underwriting syndicate with RBC Capital Markets serving as the bookrunning lead manager and Bank of America Securities and Siebert Williams Shank jointly serving as co-senior managers.
During the retail order period for the tax-exempt bonds, TFA received just over $526 million of orders, of which over $390 million was usable. During the institutional order period, TFA received roughly $190 million of orders, representing 1.7x the bonds offered for sale to institutional investors.
Given strong investor demand, yields were reduced by 1 basis point for the bonds maturing in 2025, 2029, 2030, 2031, 2033, and 2037 and reduced by 2 basis points for the bonds maturing in 2028, 2032, and 2035. Final yields ranged from 1.44% for the 5% coupon in 2023 to 3.83% for the 4% coupon in 2039.
The taxable bonds were sold via a competitive bid. The bid attracted 12 bidders, with Morgan Stanley winning at a true interest cost of 3.579%.
New York by the Numbers
The City Comptroller’s Office continues to track economic indicators in its monthly New York by the Numbers report. The most recent report, released on July 11th, discusses employment statistics by sector, real estate markets, and post-pandemic economic recovery in the City, among other topics. Crucially, the report notes that the City has experienced soaring rent prices and a decline in real hourly wage growth, which has caused tremendous hardship for many New Yorkers.
Statement on Economic Slowdown
On July 27th, the Federal Reserve announced its second consecutive 75-basis point interest rate hike in an effort to quell inflation. The next day, fears of an impending recession were further stoked when newly released national GDP data revealed a second consecutive quarter of negative growth. In response, the City Comptroller issued a statement in which he stressed the importance of building up City savings to minimize the impact of a recession on residents. In particular, the statement identified remaining federal stimulus money and the $800 million year-end excess revenues as potential sources of such funds. You can read the full statement here.
NYC History: Creation of the Comptroller’s Office
The position of NYC Comptroller was established in 1802 as an appointed position. Beforehand, there was no system to appropriate funds for specific projects, which often led to careless and unnecessary spending. In 1884, Edward Loss became the first elected City Comptroller, and the position remains an elected one to this day (City Hall Library Notes (2012), Christine Bruzzese; The Finances of New York City (1898), Edward Dana Durand, p.29).
Looking Ahead
You can sign up to receive email updates regarding upcoming NYC bond sales and/or the City’s financial position by going to the City Comptroller’s website and clicking on “Join Mailing List” in the top left corner of the page.