NYC Bonds

To Our Investor Community:

In May the Hudson Yards Infrastructure Corporation sold approximately $2.15 billion of tax-exempt and taxable refunding bonds and the Comptroller provided comments on New York City’s Fiscal Year 2018 Executive Budget. The budget has now been adopted.

$2.15 Billion Hudson Yards Infrastructure Corporation Bond Sale

The Hudson Yards Infrastructure Corporation (“HYIC”) sold $2.15 billion of Series 2017 Second Indenture Bonds (“Series 2017 Bonds”), comprised of $2.12 billion of tax-exempt fixed rate bonds and $33.4 million of taxable fixed rate bonds. Proceeds will be used to refund all outstanding Series 2007 First Indenture Bonds and a portion of the Series 2012 First Indenture Bonds.

HYIC is the financing vehicle for New York City’s investment in transforming the Hudson Yards area of west midtown by extending the #7 train west from Times Square to 34th Street and 11th Avenue, and building a three-block park and boulevard. The subway and park opened in 2015. The City also rezoned the area and created development incentives to encourage redevelopment.

The HYIC plan of finance, which included issuance of the Series 2017 Bonds and conversion of the remaining 2012 HYIC bonds to be self-amortizing, takes advantage of the substantial development to date in the Hudson Yards district, including four office buildings, 31 residential buildings, and 35 hotels that are either completed or under construction.

After this sale, all of HYIC’s bonds will amortize through 2047, and surplus revenues of the Hudson Yards district, after meeting debt service and operating expense needs, will be available each year to flow to the City’s general fund. These surplus revenues are forecasted to total billions of dollars over the life of the bonds.

The Series 2017 Bonds were rated Aa3 by Moody’s Investors Service, A+ by S&P Global Ratings and A+ by Fitch Ratings. In conjunction with the sale of Series 2017 Bonds, the Series 2012 First Indenture Bonds were upgraded to Aa3 from A2 by Moody’s Investors Service, AA- from A by S&P Global Ratings and AA- from A by Fitch, Inc.

Budget for Fiscal Year 2018

New York City’s Fiscal Year 2018 Budget was adopted. The Comptroller reviewed the budget and provided comments as mandated by the City Charter. The Comptroller notes that the economic outlook remains positive, though slower growth is expected 2019-2021 after a small bump up 2017-2018.

Forward Calendar

We anticipate two bond sales in June: Transitional Finance Authority Future Tax Secured Bonds pricing Wednesday, June 21, with a two-day order period for individual investors on Monday, June 19, 2017 and Tuesday, June 20, 2017; and a competitively bid New York Water bond sale on June 27. Further information is available via the links below.

As always, we appreciate your interest in New York City bonds.

Carol S. Kostik
Deputy Comptroller for Public Finance