News
Public Finance Wrap-Up: August 2020
Financings in August
The City and its related issuers successfully executed two financings for General Obligation Bonds and Future Tax Secured Subordinate Bonds in August. The financings served as a progressive opportunity for the City to obtain significant savings. The Comptroller’s Office is focused on seeking continuous ways to manage financings that afford the City healthy fiscal operations.
New York City Transitional Financial Authority (TFA)
On August 17, TFA began the retail order period for individuals and professionally-managed individual accounts, entering the market with the sale of a refunding transaction consisting of $1.3 billion of tax-exempt fixed rate bonds, and $275 million of taxable fixed rate bonds. Savings from the refunding totaled $374 million of total budget savings, with $230 million and $141 million concentrated in Fiscal Years 2021 and 2022, respectively. Present value savings for the transaction was $367 million, or 18.6% of the refunded par amount.
The retail order period spanned two days, with institutional pricing held on August 19. During the two days of retail, TFA received more than $500 million of orders, and received approximately $3.9 billion of orders during the institutional period. The strong demand for the bonds resulted in a significant reduction of yields, across various maturities ranging from one to six basis points. The bonds were underwritten by a syndicate led by book-running lead manager, Bank of America, with Citigroup and Ramirez & Co. serving as co-senior managers. The sale also included $275 of taxable fixed rate bonds, split into two of subseries, via competitive bid. Wells Fargo secured the winning bid for the first subseries of $128 million of bonds; while UBS won the second subseries of $147 million of bonds. For a full overview of the transaction, read the announcement via the TFA website.
New York City General Obligation Bonds
The City of New York entered the market with a combined total of $1.4 billion of tax-exempt and taxable fixed rate bonds on August 25 for retail orders, and August 26 for institutional orders. Proceeds from the refunding will help the City achieve $239 million in total debt service savings, nearly all in Fiscal Year 2021. These savings equate to a present value of 14.3% of the refunding par amount, or $233 million. Interest in the financing was drawn from both retail and institutional investors, with over $233 million of orders from individual investors. Given the strong demand, yields were reduced one to six basis points across various maturities. The financing was underwritten by book-running lead manager, Citigroup, with Bank of America and Ramirez & Co. serving as co-senior managers. The sale also included $287 million of tax-exempt fixed rate bonds offered through competitive bids, with Morgan Stanley winning the first subseries, and Bank of America winning the second subseries. For a full overview of the transaction, visit the New York City investor relations site.
Upcoming Transactions
The New York City Transitional Finance Authority (TFA) is planning to offer $1.3 billion of Future Tax Secured Subordinate Bonds. The financing will consist of both tax-exempt and taxable bonds, and will be offered during the week of September 14.
The New York City Municipal Water Finance Authority (NYW), is planning to offer $600 million of Water and Sewer Revenue Bonds. The financing will consist of tax-exempt, fixed rate bonds and will be offered during the week of September 21.
For more information on the above-mentioned financings as well as other upcoming financings and news, visiting our website.
City Economic Updates
The periodic fiscal and economic updates published by The Comptroller’s Office’s Budget Bureau continue to be of interest to our readers. The Comptroller has released an informative report that provides a weekly economic and fiscal outlook. The latest edition of New York by the Numbers – Weekly Economic and Fiscal Outlook is now available.
The Comptroller’s Cash Report and Cash Projection report are also excellent resources for economic information. The Quarterly Cash Report provides a retrospective look at the major cash events during the third quarter of FY 2020 (January 2020 – March 2020), while the Cash Projection details the cash balance projection for the City through September 30, 2020. To view both visit the Comptroller’s Cash Report page and Cash Projection page.
Underwriter and Selling Group Selection
After managing a Competitive Request for Proposal (RFP) and a Request for Qualification (RFQ) process, the Mayor’s Office of Management and Budget, the New York City Comptroller’s Office, the New York City Transitional Finance Authority (TFA) and the New York City Municipal Water Finance Authority (NYW) announced new underwriting syndicates on August 7th. The new syndicates would be responsible for underwriting various financings for the City of New York General Obligation (GO) Bonds and TFA Future Tax Secured (FTS) bonds. The City and its related issuers do not sell bonds directly to the public, and instead utilizes licensed broker-dealers, such as the ones selected. For a complete list of firms selected please refer to the Underwriter and Selling Group press release here.
Looking Ahead
The Comptroller’s Office actively monitors markets and the various federal actions taken to stabilize the economy. In partnership, the Comptroller’s Office and the Mayor’s Office of Management and Budget continue to work to ensure that the City’s financing programs provide adequate capital funding.
As our City progresses with phased reopenings and the precautions taken by our citizens and opening businesses to stay healthy, we remain hopeful our city will continue to thrive.
Marj Henning
Deputy Comptroller for Public Finance
The South Street Seaport | Photo Credit: Sean Pavone/Shutterstock
A designated historic district, the South Street Seaport is adjacent to the financial district, centered between Fulton Street and the East River. Once the hub of trade in New York City with massive steamships, large warehouses and serving as a depot for the fishing industry, the Seaport served as one of the largest hubs for trade in New York. Over the years, with trade declining, the area suffered tremendously, eventually giving way to abandoned buildings and closed businesses. Today, the area is home to some of the oldest and most revitalized architecture in downtown Manhattan, and includes the largest concentration of early 19th century commercial buildings in all of New York. From mercantile buildings to the old Fulton Fish Market, the Seaport has revived to become a modern attraction for nightlight, shopping and of course, delectable dining. The area also houses a historic museum.