N.Y. MTA to Borrow $3B More by Year's End

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New York's Metropolitan Transportation Authority plans to continue its aggressive borrowing pace with $3.1 billion in bond sales over the final three months of the year.

"We have a fairly heavy calendar as we can see here," finance manager Patrick McCoy told members of the MTA board's finance committee on Monday. "You can expect your e-mail in boxes full of remarketing circulars and official statements."

The MTA, which runs the New York City subway system, the region's commuter rail lines, and seven toll bridges and two tunnels, plans several refunding and remarketing transactions, including floating-rate note deals.

Floating-rate notes adjust weekly, based on a Securities Industry and Financial Markets Association index, and have become increasingly popular in the short market. The MTA plans a $35 million remarketing in October and a $359 million synthetic fixed-rate refunding in November, McCoy said, both involving the notes.

While most of the remaining deal will involve transportation revenue bonds, the MTA's biggest deal in October will be a $953 million refunding of dedicated tax fund bonds. The authority's remaining new-money deal for the year will feature a $350 million sale targeted for late October or early November.

According to MTA documents, the authority has $31.5 billion in debt outstanding. It has borrowed more this year to cover the costs of capital projects, including the Second Avenue subway line, East Side access for Long Island Rail Road trains and the overhaul of the Fulton Street subway hub.

Moody's Investors Service rates the authority's transportation revenue bonds A2, while Standard & Poor's and Fitch Ratings assign A.

On Sept. 13, the MTA's Triborough Bridge and Tunnel Authority terminated two swap transactions with Citigroup Financial Products Inc., triggered by the Moody's downgrade of Citigroup Inc. on June 21.

The terminations relate to general revenue variable-rate bonds, Series 2001B and 2001C, with notional amounts of $88.5 million and $88.6 million, respectively. The TBTA paid the Citigroup unit a discounted valuation amount of $19.4 million and McCoy said the move is expected to result in debt-service savings.
Also on Monday, the finance committee approved a request to add PNC Capital Markets LLC to its approved pool of variable rate marketing agents and dealers.

In July, PNC Bank NA had submitted an $85 million low-cost proposal for a letter of credit to replace BNP Paribas as a liquidity provider on $250 million of Series 2005E transportation revenue variable-rate demand bonds.

"BNP Paribas is exiting and this fills the void," McCoy told the committee.

According to MTA officials, PNC also wants to serve as remarketing agent. "It has become a fairly widespread practice for the bank providing credit or liquidity support to also serve as a remarketer when the bank has adequate remarketing capabilities," chief financial officer Robert Foran wrote the committee.

The MTA's full board will meet Thursday.

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Transportation industry New York
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