NYC Bonds

New York City conducted two major bond sales in September, both of which achieved unusually narrow spread levels to tax-exempt benchmarks – reflecting both tight municipal supply and strong investor demand.

$1.1 Billion NYC General Obligation Bond Sale

New York City sold approximately $1.1 billion of General Obligation bonds via negotiated and competitive sales on September 14. Proceeds from the sales will fund capital projects throughout New York City. The City sold tax-exempt and taxable fixed rate bonds, and converted a portion of its variable rate bonds to fixed rate. Siebert Cisneros Shank & Co., L.L.C served as book-running senior manager for the negotiated bonds. Bank of America Merrill Lynch and Jefferies each won a tranche of taxable fixed rate bonds, which drew eight and nine bidders, respectively. The City priced $200 million of variable rate bonds Monday, bringing the total transaction to just over $1.3 billion. Read the full summary

$380 Million New York Water Bond Sale

The New York City Municipal Water Finance Authority sold approximately $380 million of Second Resolution Revenue Bonds to fund capital projects and shift some variable rate demand bonds to fixed rate. The bonds were sold via negotiated sale, with Raymond James serving as book-running lead manager and Blaylock Van, LLC serving as joint lead manager. The tax-exempt fixed rate bonds included maturities from 2028 to 2032 and 2045-2046 and received strong investor response from both individuals and institutions.

Federal Infrastructure Proposals

Tax reform is expected to take priority over infrastructure in Congress through the end of 2018. Recent discussions at the federal level have clouded the picture on whether proposals will integrate public-private partnerships, rely on direct federal spending, or take other approaches. The timing of a federal infrastructure package is developing and we will continue to monitor proposals and discussions.

New York City Bond Fact

It may surprise you to learn that New York City’s General Obligation (GO) debt outstanding is at the lowest level since 2008, totaling about $37.9 billion at the June 30^th close of Fiscal Year 2017. We haven’t stopped selling bonds to fund our capital program! The reduced GO debt level reflects three major factors:

• GO debt amortizes quickly – over the next ten years, 53% of the outstanding GO debt is scheduled to be repaid.
• Original issue premium (OIP) generated when we sell bonds with premium coupons reduces the par amount of bonds we sell. In addition to raising new capital funds, we’ve actively refinanced outstanding GO bonds to take advantage of lower interest rates, and OIP on refunding bonds also reduces the par amount of GO debt outstanding.
• Most importantly, the New York City Transitional Finance Authority shoulders an important share of the City’s debt issuance. The City’s current Financial Plan, as in recent years, calls for roughly equal amounts of GO and TFA Future Tax Secured bonds to fund capital needs over the Plan years.

Other City bond credits, most notably the TFA’s Building Aid Revenue Bonds program (for educational capital) and New York Water (for the Department of Environmental Protection’s capital needs) also fund significant shares of the City’s capital budget.

Looking Ahead

The New York City Transitional Finance Authority plans to sell approximately $1 billion of tax-exempt new money and refunding Building Aid Revenue Bonds, with an order period for individual investors on October 13 and 16 and final pricing on the 17. Read the full announcement

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

Carol S. Kostik
Deputy Comptroller for Public Finance