New York City Reveals Syndicates for Three Main Credits

New York City Friday announced the new underwriting syndicates for its three main credits.

When the city put out a request for proposals for underwriters in March, it said it wanted ideas on how it could utilize bond programs that were created or expanded under the federal stimulus package.

The city has yet to announce whether it plans to go to market with taxable Build America Bonds, but the underwriter selection indicated that this is potentially on the horizon.

The announcement said firms can be rewarded with the right to be book-running senior manager, outside their designated rotations, if they bring financing ideas to the table related to BABs or Qualified School Construction Bonds or other stimulus programs.

The city plans to sell $1.4 billion of QSCBs, tax-credit bonds for schools created under the American Recovery and Reinvestment Act, over the next two years.

Underwriter selections were made by the Office of Management and Budget and the city comptroller's office and were approved by the individual issuers - New York City's general obligation credit, the New York City Transitional Finance Authority, and the New York City Municipal Water Finance Authority. Officials from both offices were unavailable on Friday for comment. The city sold $5.92 billion of bonds through those issuers in the first half of 2009, according to Thomson Reuters.

Underwriters are selected for an undetermined period of time. The last selections were made in 2006 and 2002. The selections last week for senior manager were similar to those made in 2006, but a few firms were notably absent, having disappeared from the market or merged with others over the past year.

The city chose Morgan Stanley, Merrill Lynch & Co., JPMorgan, Citi, and Siebert Brandford Shank & Co. as senior managers for its GO bonds. Siebert and JPMorgan are new additions to the city's GO underwriting pool. Bear, Stearns & Co., which was taken over by JPMorgan last year, is no longer a member of the syndicate. The city also selected 13 senior co-managers and nine co managers for its GO.

The city planned to sell $6.45 billion of GO debt in fiscal 2010 but that amount will change because a state law passed since the budget's adoption increased capacity for the city to sell bonds through the higher rated TFA as it did last week with an $800 million tax-exempt deal.

The new TFA slate includes Goldman, Sachs & Co., JPMorgan, Merrill Lynch, Citi, Morgan Stanley, and Barclays Capital. Merrill and Barclays are new additions to the list. The TFA had chosen Citi last time around as a senior manager only for Building Aid Revenue bonds, or BARBs, which are backed by the state. The defunct Lehman Brothers and Bear Stearns are also absent from that list. The city plans to sell $250 million of BARBs in the current fiscal year.

The biggest change in syndicates was at the New York City water finance authority, which for the first time selected Barclays Capital, Ramirez & Co., Jefferies & Co., M.R. Beal & Co., and Morgan Keegan & Co. Only M.R. Beal returned from the previous slate that had also included UBS, Siebert Brandford Shank & Co, First Albany Capital Inc. and Merrill Lynch.

The authority plans to sell $2.2 billion of bonds during the current fiscal year.

The city chose Loop Capital Markets LLC, Wachovia Bank NA, and Rice Financial Products Co. as co-senior managers that will be given an opportunity to earn the right to lead manage a deal.

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