N.Y. Sets 1st Taxable BAB Deal for $600M

New York State plans to jump into the growing taxable Build America Bonds market next month with a $600 million personal income tax bond offering.

Notice of the deal was posted last week on the Division of Budget's bond sale calendar. The Dormitory Authority of the State of New York will market the bonds on Aug. 20, the same day it also will market $400 million of tax-exempt PIT bonds.

Merrill Lynch & Co. and Loop Capital Markets LLC will underwrite the BABs and MR Beal & Co. and Morgan Stanley will underwrite the tax-exempt portion.

Under the BABs program, which was created under the American Recovery and Reinvestment Act, issuers can choose to take a federal subsidy worth 35% of the interest cost. So far, only one issuer in the state, the Metropolitan Transportation Authority, has sold BABs.

DASNY last week referred questions about the BAB sale to the Division of Budget, which did not return calls by press time. DASNY is one of five public authorities that can sell PIT bonds on behalf of the state. New York plans to sell $5.9 billion of bonds in fiscal 2010, of which 69% are expected to be PIT bonds, according to its enacted financial plan.

 

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