N.Y. City Water to Sell $200M

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The New York City Municipal Water Finance Authority is scheduled to price $200 million of second resolution adjustable rate tax-exempt bonds on Thursday through negotiation.

Barclays Capital and PNC Capital Markets are the respective underwriters for $150 million and $50 million adjustable-rate subseries to the fiscal 2013 Series AA bonds.

The authority provides more than 1 billion gallons of water daily to 9 million customers. Of that total, 8.2 million are in New York City and the rest are in Westchester, Putnam, Orange and Ulster counties.

The bonds will have liquidity support from standby bond-purchase agreements provided by Bank of Tokyo-Mitsubishi and PNC Bank.

Moody's Investors Service rates the bonds Aa2/VMIG1, while Fitch Ratings and Standard & Poor's assign AA-plus. All have a stable outlook. Moody's said the ratings affect $8.2 billion of first resolution and $19.7 billion of second-resolution bonds outstanding.

According to Moody's, the long-term ratings reflect strong bondholder protections provided by the authority's legal structure and healthy debt service coverage. The rating agency warned that implementing the authority's capital plan requires substantial issuance of new debt, which in turn would require sizeable rate increases to support.

"Additionally, like water and sewer systems throughout the nation, regulatory mandates also could drive future capital costs upwards and create other uncontrollable spending needs," Moody's said.

The authority in June sold $662 million of second-resolution, fixed-rate, tax-exempt new-money and refunding bonds in a sale upsized from $450 million.

Orrick, Herrington & Sutcliffe LLP is bond counsel. Nixon Peabody LLP is representing the underwriters. Lamont Financial Services Corp., Drexel Hamilton LLC and Acacia Financial Group Inc. are the financial advisors and Amawalk Consulting Group LLC is the rate consultant.

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Infrastructure New York
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