NYC Bonds

To our investor community,

October 2011 was a busy month for New York City and its public finance professionals. New York City and its related issuers priced over $2.1 billion of tax-exempt fixed rate and variable rate bonds, including $1 billion of Hudson Yards Senior Revenue Bonds, while holding investor conferences for both the Hudson Yards Infrastructure Corporation (“HYIC”) and the New York City Municipal Water Finance Authority (“NYW”), and selecting new financial, pricing, investment and swap advisors. In addition, the NYC Comptroller’s Office issued the Comprehensive Annual Financial Report for fiscal year 2011 and announced a major pension investment reform plan jointly with the Mayor and union leaders.

Public Financing

The New York City Transitional Finance Authority (“TFA”) priced $250 million Fiscal 2012 Series B&C Future Tax Secured Subordinate Refunding Bonds and reoffered $508 million Fiscal 2003 Subseries A-1 TFA Future Tax Secured Refunding Subordinate Bonds on October 12. TFA was able to successfully sell bonds at a time when news from Europe continued to create turbulence in the fixed income markets. By taking advantage of the low interest rate environment to execute the refunding, TFA was able to generate over $12.8 million in present-value savings for City taxpayers. (Read the Press Release)

HYIC TourOn the same day as the TFA pricing, NYC also set the interest rate for the initial period in daily rate mode on $127 million General Obligation Adjustable Rate Bonds, Fiscal 2012 Subseries D-3.The Bank of New York Mellon is the irrevocable letter of credit (“LOC”) provider and the interest rate for the initial period was set at 0.03%.On October 19, the Hudson Yards Infrastructure Corporation priced $1 billion of new money bonds. The proceeds will be used to pay for completing the extension of the Number 7 Subway line from its current terminus at 42nd Street and Eighth Avenue to 34th Street and 11th Avenue in the heart of the Hudson Yards Redevelopment Area, and to pay for other infrastructure needs including park development and other amenities.Having last issued in 2006, HYIC undertook a significant marketing effort to update investors on the credit, which included an institutional investor site tour and presentation. Participants were taken to view the subway tunnels under construction and also received a birds-eye view of the Hudson Yards Redevelopment Area from an adjacent building. Participants were taken to view the subway tunnels under construction (Photo at right) and also received a birds-eye view of the Hudson Yards Redevelopment Area from an adjacent building. On the day of pricing, the reception for the Bonds was outstanding and the HYIC received $3.6 billion of priority orders for the $1 billion of bonds being offered, allowing the Bonds to be re-priced at lower yields. (Read the Press Release)

On October 31, TFA reoffered and converted to variable rate mode $300 million Fiscal 2003 Subseries A-2, A-3 and A-4 Future Tax Secured Refunding Subordinate Bonds. $200 million of the Bonds have a LOC from The Bank of Tokyo Mitsubishi UFJ, Ltd., acting through its New York Branch and $100 million of the Bonds have a liquidity facility from TD Bank, NA. The initial rates for the Fiscal 2003 Subseries A-2, A-3 and A-4 Bonds are 0.05%, 0.10% and 0.06%, respectively.

Looking ahead, TFA plans to sell fixed-rate new money tax-exempt and taxable bonds during the week of November 7, 2011 (Read the Press Release) and NYW is tentatively scheduled to price fixed-rate tax-exempt new money bonds during the week of November 14, 2011. You can sign up to receive bond sale notification emails on the Comptroller’s Public Finance Investor Relations Website.

Selection of Advisors

After a competitive request for proposals process, the NYC Comptroller’s Office, the Mayor’s Office of Management and Budget and three of the City’s financing entities selected financial, pricing, investment and swap advisors. In total, eight firms were selected to advise New York City and its related issuers on capital market transactions.(Read the Press Release) Firms selected include both veteran advisors to the City and firms that have not previously done this work for the City. Three of the firms are minority and/or women-owned businesses and one is a service-disabled veteran owned firm.

NYW Investor Conference On October 21, 2011, NYW held its annual institutional investor conference. The conference featured presentations from Tom Paolicelli, Executive Director of NYW and Carter H. Strickland, Jr., Commissioner of the NYC Department of Environmental Protection. Afterwards, participants took a short bus ride to the Coney Island Water Pollution Control Plant for a facility tour. (Photo at right)

Financial Reports The Office of the NYC Comptroller Bureau of Accountancy released the Comprehensive Annual Financial Report (“Annual Report”) for fiscal year ending June 30, 2011. You can sign up to receive a notification when the Annual Report is ready for electronic download and when other key reports are published. A limited number of printed Annual Reports are available now; please contact Christopher Pak to request a copy.

Pension Investment Reform New York City Comptroller John C. Liu, Mayor Michael R. Bloomberg and organized labor leaders announced an agreement in principle to reform the investment governance and management of the City’s pension funds. The proposal would place investment advisory authority for all five of the currently independent City pension funds under one new pension board, supported by an independent, full-time staff led by a Chief Investment Officer, who would be appointed to a fixed term. The proposal is intended to insulate management of pension assets from any political office, further professionalize it and make it more consistent with industry best practices. The proposal aims to increase investment returns, lower the City’s pension costs, protect and strengthen pensions for current and future retirees, enhance accountability and guard against the possibility of fraud and corruption. This is the first major reform of NYC pension investment structure in 70 years. (Read the Press Release)

As always, we welcome your feedback and suggestions on how we can make our site more useful for our investors. Please sign up for updates to keep informed about the latest developments. Thank you for your interest in New York City Bonds.

Carol Kostik
Deputy Comptroller for Public Finance