NYC Bonds

To Our Investor Community:

As New York cleans up and rebuilds from Hurricane Sandy, the storm has highlighted the important role of municipal infrastructure and the large public and private investment that our city requires. To that end, we are doing our utmost to save the City money through bond refinancings, achieving more than $200 million in such savings in the last two months.  And City government continued to meet its financial and statutory obligations throughout the storm and recovery.

Despite the storm, the Comptroller released the Comprehensive Annual Financial Report (“Annual Report”) for Fiscal Year 2012 on Oct. 31, 2012, as required by the City Charter.  The report shows that, for the 32nd consecutive year New York City completed its fiscal year with a General Fund surplus, as determined by Generally Accepted Accounting Principles (“GAAP”). For further details please refer to the press release or you may download the Annual Report.

The Comptroller’s Office of Contract Administration also has been working vigorously since the storm to register emergency contracts in order to provide relief to New Yorkers.  As of Nov. 21, 2012, our office has registered a total of $694.7 million of Sandy-related contracts.

As of Nov. 30, New York City’s cash balance stands at approximately $3.2 billion, compared to $1.7 billion at this time last year.  Historically, the city’s annual low cash balance occurs in early December.  This year, the low cash balance will likely occur during the week of Dec. 10, with an estimated low balance of $2.1 billion-$2.7 billion.  These projections do account for Sandy-related expenses.  For further details please refer to the NYC Cash Balance Projection released November 30th.

December Bond Sales

The New York City Municipal Water Finance Authority (“NYW”) intends to sell approximately $435 million of second resolution fixed-rate tax-exempt new money bonds on Tuesday, December 4, 2012.  There will be a one-day retail order period on Monday, December 3, 2012.

Fitch Ratings rates NYW’s second resolution bonds at AA+, Moody’s Investors Service rates these bonds at Aa2 and Standard & Poor’s rates them at AA+.

New York City also plans to sell approximately $850 million of tax-exempt fixed-rate General Obligation refunding bonds on Tuesday, Dec. 11, 2012, via negotiated sale.  A two-day retail order period will begin on Friday, Dec. 7, 2012 and continue  through Monday, Dec. 10, 2012.

The ratings for New York City General Obligation Bonds are Aa2 from Moody’s Investors Service, AA from Standard & Poor and AA from Fitch Ratings.

Prior Sale Results

On Oct. 23, the City finalized a sale of tax-exempt new money, refunding, and conversion of GO bonds. The City was able to take advantage of the low interest-rate environment to offer $600 million of tax-exempt fixed-rate refunding bonds and secure substantial budget savings for City taxpayers.  The refinancing achieved budgetary savings of more than $107 million or more than $98 million on a present-value basis with future savings discounted back to the sale date.  Most of the savings will occur in FY 2014, when the City faces a large projected budget gap.

Strong investor demand made it possible to reduce yields in nine maturities from one to nine basis points, providing lower borrowing costs.  One maturity had its yield increased by two basis points.  Yields ranged from 0.21 percent in 2013 to a maximum yield of 3.40 percent in 2035.

The City received approximately $275 million of retail orders for the tax-exempt bonds during the two-day retail order period. During the institutional pricing, the City received approximately $1.7 billion of priority orders for the approximately $732 million in bonds offered to institutions.  Please refer to the press release for further details.

On Nov. 16, the New York City Transitional Finance Authority (“TFA”) successfully sold approximately $914.8 million of fixed-rate bonds via competitive bid.  This was TFA’s first-ever competitively bid refinancing, consistent with Comptroller Liu’s goal to increase competition for City business.  Of the $914.8 million, $100 million were tax-exempt new money bonds, $552.8 million were tax-exempt refunding bonds, and $32 million were tax-exempt bonds converted from variable-rate demand bonds (“VRDBs”) to fixed-rate bonds.  The TFA also sold $100 million of taxable new money Qualified School Construction Bonds (“QSCBs”) and $130 million of taxable new money bonds.

The TFA received nine bids for the $552.8 million of tax-exempt refunding bonds.  The winning bid was submitted with a TIC of approximately 2.17 percent.  The refunding achieved budgetary savings of more than $95 million or more than $86 million on a present-value basis with future savings discounted back to the sale date.  The TFA also received eight bids for the $32 million of tax-exempt bonds converted from VRDBs to fixed-rate bonds, ten bids for the $100 million of taxable QSCBs with a single maturity in November 2035 and ten bids for the $130 million of taxable new money bonds.

The TFA will also price $248 million of tax-exempt new money VRDBs on Dec. 3, 2012.

Information on how to buy New York City bonds is available on the Comptroller’s website. The City typically announces future financings one to two weeks before the sale date. You can subscribe here 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’s 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