New York City Offers Details on Upcoming $775M GO Bond Sale

New York City on Tuesday announced details of its upcoming $775 million sale of taxable and tax-exempt new-money general obligation bonds, which it plans to issue in three subseries.

The city intends to price $515 million of tax-exempt fixed-rate bonds on July 20, following a two-day retail order period.

Citi will be the book-running senior manager. Bank of America Merrill Lynch, JPMorgan, Morgan Stanley and Siebert Brandford Shank & Co. will be the co-senior managers.

City officials are also planning to price $85 million of taxable fixed-rate bonds through a competitive sale on July 20. In addition, it expects to price $175 million of tax-exempt variable-rate demand bonds, or VRDBs, on Aug. 8.

The bonds will be used for infrastructure projects affecting New York’s schools, parks and roads.

Alan Anders, deputy director for finance in the New York City Office of Management and Budget, said the taxable amount will benefit affordable housing and economic development efforts.

Anders called the overall issuance “a good deal for us … no surprises.”

Asked if the sale would involve any refinancing, a spokesman for City Comptroller John Liu's office said: “We’re always monitoring opportunities. Nothing has been determined yet.”

He was unsure whether the bonds would involve insurance.

No swaps are involved, the spokesman added.

The city will issue a preliminary official statement within days.

The three major credit rating agencies — Standard & Poor’s, Fitch Ratings and Moody’s Investors Service — have all assigned double-A ratings to the city’s GO bonds.

New York City’s general obligation debt, as of May 31, stood at $41.4 billion.

Last month, the city sold $211.8 million of GOs.

It issued $130 million of taxable new-money bonds in two subseries and converted $81.75 million of tax-exempt VRDBs to fixed-rate bonds through a competitive sale.

In March, New York City sold $896 million of general obligation refunding bonds.

The city and its issuers expect to sell $29 billion of new-money bonds over the next four years.

New York City’s property taxes, which are the largest single source of its revenue, provide the main source for payment of GO bonds.

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