NYC Bonds

To Our Investor Community:

New York City and the New York City Municipal Water Finance Authority (“NYW”) both conducted bond sales spanning the end of September and the first week of October, with one issue securing more than $100 million in budget savings for City taxpayers.

$801 Million New York City Municipal Water Finance Authority (“NYW”) Sale

NYW mailed an issue totaling $801 million Water and Sewer System Second General Resolution Revenue Bonds on Sept. 25 and closed on Oct. 4.  The sale included $200 million new money Fiscal 2013 Series AA Adjustable Rate Bonds. The proceeds from the Fiscal 2013 AA bonds will be used to pay down principal and interest on NYW’s Commercial Paper Notes and to pay the costs for system improvements.

The balance of the Water and Sewer System Second General Resolution Revenue Bonds consisted of a reoffering of $200 million, Fiscal 2006 Subseries AA-1 Adjustable Rate and $401 million, Fiscal 2008 Series BB Adjustable Rate Bonds.  Both series of bonds were already outstanding; NYW substituted for expiring liquidity agreements with new liquidity agreements with different providers.  Each liquidity provider has committed to pay a purchase price equal to the outstanding principal of and up to 35 days of interest on the related subseries, if needed.

NYW Second General Resolution Bonds are rated AA+ by Fitch, Aa2 by Moody’s Investors Service, and AA+ by Standard & Poor’s.  Each series also holds a short-term credit rating based on the specific liquidity provider.

In addition to the $801 million, NYW also issued $217 million of Bond Anticipation Notes (“BANs”) directly to the New York State Environmental Facilities Corporation.  These short-term notes were issued at a yield of .313% and mature on Oct. 27, 2013. It is expected, however, that NYW will refinance these BANs with longer-term bonds before their maturity date.

New York City General Obligation (“GO”) Bond Sale

On Sept. 30, the City commenced a sale of tax-exempt new money, refunding, and conversion of GO bonds.  A retail-order period ran from Friday, Sept. 30 through Monday, Oct. 1.  During the retail-order period, the City received about $275 million of orders for the tax-exempt bonds, net of oversubscriptions for some maturities.

The City also took advantage of the low interest-rate environment and offered $600 million of tax-exempt fixed-rate refunding bonds and secured 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.

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.

Looking Ahead

The New York City Transitional Finance Authority (“TFA”) plans to offer new money bonds later in October.  Deal size and structure have yet to be announced.

Information on how to buy New York City bonds is available on the Comptroller’s website. Future financings typically are announced 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.

New York City Cash Balance Projection

On Sept. 28, the New York City Comptroller’s Office of Financial Analysis issued its cash balance projections for October 2012 to March 2013.  These figures exclude bond proceeds being held for capital purposes and other monies held in trust.

The City ended its fiscal year 2012 on a positive note, with an ending cash balance of $6.297 billion.  As of Sept. 26, the NYC cash balance stood at $5.870 billion.

Historically, the city’s annual low cash balance occurs in early December.  This year the low cash balance will likely occur during the first two weeks of December, with an estimated low balance of $1.5 billion-$2 billion.  Please refer to the NYC Cash Report Projection for further details. 

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