NYC Bonds

To Our Investor Community:

The end of FY 2016 is approaching amid a flurry of activity in New York City finances. In addition to the City selling $800 million of General Obligation (GO) tax-exempt refunding bonds, Comptroller Stringer released his analysis of the Mayor’s Executive FY 17 budget and testified before the City Council’s Finance Committee.  The Bureau of Budget also released its May 2016 Cash letter (either capitalize one or the other, cash letter) along with its FY 2016 third quarter Cash Report showing a robust City cash position.   Also, New York City and its financing authorities announced its new underwriter and selling group members.  In other news, beginning June 2016, users of the Municipal Rule Making Board’s EMMA website will have free, convenient access to an economic calendar with dates and descriptions of key macroeconomic developments that could have an impact on the trading and issuance of municipal securities.

Underwriter and Selling Group Selection

After conducting a Competitive Request for Proposal (RFP) and a Request for Qualification (RFQ) Processes, the Mayor’s Office of Management and Budget, the City Comptroller’s Office, the New York City Transitional Finance Authority (TFA), and the New York City Municipal Water Finance Authority (NYW) announced new underwriter and selling group members respectively, for the City of New York’s General Obligation (GO) bonds, TFA Future Tax Secured (FTS) bonds, TFA Building Aid Revenue Bonds (BARBs) and NYW bonds.  The City and its related issuers do not sell bonds directly to the public, instead using these licensed broker-dealers.  For a complete list of firms selected please refer to the Underwriter and Selling Group press releases.

Comptroller’s Analysis and Testimony on FY 17 Executive Budget

As mandated by New York City’s Charter, the Comptroller released his Report analyzing the City’s Executive FY 2017 Budget and Financial Plan for FYs 2016-2020.  The analysis anticipates higher projected tax revenues, but growing out-year budget gaps with a projected $3.8 billion budget gap in FY 2019 and signs of a potential economic slowdown. In his testimony, Comptroller Stringer emphasized the importance of building up the City’s cushion and finding agency savings. The report also analyzed the Mayor’s revenue and spending assumptions for FY 2016-2020 and identified risks and offsets to the financial plan. For a complete list of the findings you may refer to the press release or download the entire Report.

$800 million General Obligation Refunding

The City of New York entered the market with its $800 million GO tax-exempt refunding on May 16th with a two-day retail order period.  During these two days approximately $240 million of orders were received from individual investors, bank trusts, investments advisors and money managers. Institutional pricing completed the sale on May 18th. Stated yields on the bonds ranged from 0.45% in 2016 to 2.88% in 2036. The refunding bonds were sold via negotiated sale through the City’s syndicate, led by book-running senior manager BofA Merrill Lynch with Citigroup, Goldman Sachs & Co, Jefferies LLC, J.P. Morgan, Loop Capital Markets, Ramirez & Co., RBC Capital Markets, Siebert Brandford Shank & Co., L.L.C., and Wells Fargo Securities serving as co-senior managers.

This GO refunding will provide over $169 million in budget relief to New York City taxpayers with approximately $164 million saved in FYs 2016 – 2020.  The refunding was also highly efficient with a net present value savings of $159 million or 17.52% of refunded par.

The ratings for New York City General Obligation Bonds are AA/AA/Aa2 from Standard & Poor’s, Fitch Ratings, and Moody’s Investor Service, respectively, with “Stable” outlooks from all three rating agencies.

EMMA Economic Calendar

The MSRB’s EMMA website has been enhanced to provide an economic calendar. The calendar will highlight key federal data releases, events and other indicators of the health of the overall economy, such as labor statistics and interest rate decisions. EMMA’s economic calendar will be provided by Econoday.  Municipal securities issuers, investors and their financial professionals may want to consult the economic calendar when assessing market activity.  The EMMA system is best known for providing trade data for municipal securities and for being a repository for municipal bond disclosures.  Learn more about other tools and resources on EMMA. 

New York City Cash Projection

On May 31, the Comptroller’s Office Bureau of Budget, Division of Financial Analysis released its most recent Cash Letter and Quarterly Cash Report. The Cash Letter details the cash balance projection for the City through July 31, 2016.  The Quarterly Cash Report provides a retrospective look at the major cash events during the third quarter of FY 2016 which covers January to March 2016. The cash letter shows that the City’s cash condition is very healthy. As of May 27, 2016, the City’s unrestricted cash balance stood at $12.387 billion, exceeding last year’s comparable figure by $3.360 billion. Over the past twelve months, the cash balance has averaged $10.617 billion, compared to $9.357 billion for the same period last year.

Looking Ahead

There are no New York City bond sales currently scheduled for June. Information on how to buy New York City bonds is available on the Comptroller’s website.  There, you can subscribe 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 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