NYC Bonds

To Our Investor Community:

The City’s Fiscal Year 2013 ended on June 30 with more than $6.79 billion of bonds sold in order to fund capital projects and $5.58 billion sold in order to refinance high-coupon debt so as to provide budget and ratepayer relief. The combined issuance under the City’s General Obligation (“GO”), Transitional Finance Authority (“TFA”) and Municipal Water Finance Authority (“NYW”) credits was $12.38 billion.

City issuers took advantage of the low interest-rate environment to secure substantial savings from the refinancings. The gross savings to GO, TFA, and NYW totaled $885 million, or more than $763 million on a present value basis with future savings discounted back to the sale date. $564.4 million of budget savings will be realized in FY14 and FY15. By executing these refundings, we provided budget-balancing relief to the City’s operating budget and to water and sewer ratepayers. While some investors may be disappointed to lose the high-coupon bonds we are refinancing, these budget savings are important. We continue to monitor refinancing opportunities.

New York City Budget for FY 2014 and Four Year Financial Plan, 2014-2017

New York City’s $69.9 billion operating budget for the fiscal year 2014 beginning July 1 and related Four Year Financial Plan were adopted June 27 and can be accessed through the Office of Management and Budget (OMB) website. The FY 2014 budget is balanced, as required by law.

June Bond Sales

Despite severe turbulence in the fixed-income markets, New York City completed transactions three weeks in a row in order to secure capital-funding needs and to save tax and ratepayers’ money by refinancing higher interest-rate bonds.

$800 Million New York City Transitional Finance Authority Sale

During the week of June 10, the New York City Transitional Finance Authority sold $800 million of fixed rate Future Tax Secured Tax-Exempt Subordinate Bonds. These bonds provide ongoing funding for the City’s capital-improvement program.

The TFA received approximately $224 million of retail orders during the two-day retail order period. Final yields varied by coupon and maturity, ranging from 0.35% in 2015 to 4.176% in 2043.

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.

$344 Million New York City Municipal Water Finance Authority Sale
$401 Million New York State Environmental Facilities Corporation

During the week of June 17, the New York City Municipal Water Finance Authority sold $344 million of Second Resolution, fixed-rate, tax-exempt bonds, which included $293 million of new money and $51 million refunding bonds. The refunding portion achieved budgetary savings of $3.8 million or $2.5 million in present value savings for New York City water and sewer rate payers.

During the one-day retail order period, NYW received $145 million of orders. Continued strong investor demand at institutional pricing made it possible to reduce yields in the 2035 maturity by three basis points. Final yields-to-call varied by coupon and maturity, ranging from 3.38% in 2028 to 4.25% in 2047.

Fitch Ratings rates NYW’s Second Resolution bonds at AA+; Moody’s Investor Service rates these bonds at Aa2, and Standard & Poor’s rates them at AA+.

As part of a combined plan of finance with NYW, the New York State Environmental Facilities Corporation sold $401 million of refunding bonds during the week of June 24, on behalf of NYW. The refunding achieved budgetary savings of $32 million or $23 million in present value savings for rate payers.

Looking Ahead

We anticipate a New York City General Obligation bond sale in July. Details on the transaction will be announced 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.
For the next several months, this monthly wrap-up will be posted on our website, but not distributed electronically to subscribers. Please check the Investor Relations website at the beginning of each month for the wrap-up of the prior month’s activities.

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