New York City TFA Sets $650M of Building Aid Revenue Bonds

The New York City Transitional Finance Authority this week plans a $650 million sale of new-money building aid revenue bonds.

The authority intends to issue $550 million of Subseries S-1A fixed-rate, tax-exempt bonds, known as BARBs, beginning with a two-day retail order period on Monday.

Book-running senior manager Morgan Stanley will lead the TFA's underwriting syndicate, with Barclays Capital, Bank of America Merrill Lynch, Citigroup, Goldman Sachs and JPMorgan as the co-seniors.

Moody's Investors Service rates the BARBs Aa3, while Standard & Poor's and Fitch Ratings each assign an equivalent AA-minus.

The TFA issues bonds for general capital purposes for New York City. In 2006, the state Legislature authorized the authority to issue bonds to finance a portion of the city's educational facilities capital plan.

In the 2011 fiscal year, the TFA issued $650 million in new-money BARBs. As of June 30, the authority's outstanding BARBs totaled $4.7 billion, according to city Comptroller John Liu's annual financial report.

Moody's assigned a stable outlook, citing the state's long history of providing building aid as a portion of the city's general education funding.

The rating agency said stronger protection for the pledged revenues and an upgrade in New York State's rating could drive the TFA's rating up, while a deterioration in the state's financial condition and a significant decrease in debt service coverage could propel it downward.

The state's general obligation bonds carry an Aa2 rating from Moody's and an equivalent AA from Fitch and Standard & Poor's.

New York City's GO bonds have the same ratings from each agency.

Also on Wednesday, the authority plans to sell $100 million of Subseries S-1B fixed-rate, taxable qualified school construction bond BARBs through competitive sale.

This bond program, part of the 2009 stimulus package, funds new construction or renovation of public schools.

Fulbright & Jaworski LLP is bond counsel to the authority, with the city's corporation counsel also advising. Winston & Strawn LLP is the underwriters' counsel.

Last month the TFA issued $600 million of future tax-secured bonds, Series 2012-D, Subseries D-1.

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