NYC Bonds

November was a busy month with both the New York City Transitional Finance Authority (TFA) and Municipal Water Finance Authority (NYW) entering the market. The NYW financing included a refunding of outstanding high coupon bonds that yielded over $57 million in budget savings for water and sewer ratepayers. In addition, the Mayor’s Office of Management and Budget (OMB) released the November Financial Plan update.

$850 Million NYC TFA

The Transitional Finance Authority sold $850 million of future tax secured fixed-rate subordinate bonds, which included $700 million of tax-exempt new money bonds and $150 million of taxable new money bonds.

The TFA received approximately $92 million of retail orders for the tax-exempt bonds during the two-day retail order period in which individual investors had priority for the bonds. During the one day institutional period, the TFA offered approximately $608 million bonds and received $889 million of priority orders from institutional investors. Final yields on the $700 million tax-exempt bonds varied by coupon and maturity, ranging from 0.34% in 2016 to 3.72% in 2042. The tax-exempt bonds were sold via negotiated sale by the TFA’s financing syndicate, led by book-running senior manager Barclays Capital, with BofA Merrill Lynch, Goldman, Sachs & Co., J.P. Morgan, Loop Capital Markets LLC, Morgan Stanley, and Wells Fargo Securities serving as co-senior managers on the transaction.
The $150 million taxable new money bonds were sold via competitive bid. A total of 10 bids were received with Morgan Stanley submitting the winning bid with a true interest cost of approximately 3%.

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.

$392 Million Combined NYW Plan of Finance

The New York City Municipal Water Finance Authority undertook a $392 million plan of finance. The transaction consisted of approximately $136 million second resolution, fixed-rate, tax-exempt new money and $256 million refunding bonds.

NYW received over $92 million in orders from individual investors during the one day retail order period. During institutional pricing NYW received over $520 million in priority orders. This strong demand allowed NYW to reduce yields in three maturities by one to two basis points. Final yields varied by coupon and maturity, ranging from 2.80% in 2028 to 3.91% in 2045. The refunding achieved budgetary savings of more than $57 million, or more than $40 million on a present-value basis.

The bonds were sold today via negotiated sale with Ramirez & Co, Inc. serving as book-running senior manager on the transaction. Barclays Capital, Citigroup, and Raymond James served as co-senior managers.

NYW’s second resolution bonds are rated AA+ by Fitch Ratings, Aa2 by Moody’s Investors Service and AA+ by Standard & Poor’s.

November Financial Plan

As required by State law and the New York City Charter, OMB released a Financial Plan update on November 25th. New York City prepares a four-year annual financial plan, which is reviewed and revised on a quarterly basis and which includes the City’s capital, revenue and expense projections and outlines proposed gap-closing programs for years with projected budget gaps. You can download the November Plan from OMB’s website. The Comptroller’s office is completing its required review of the Financial Plan update and will release a report in December.

Looking Ahead

New York City will not be selling bonds in December, but expects an active first quarter of 2015. 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.

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