New York's Metropolitan Transportation Authority intends to market five subseries of floating rate securities totaling $242 million and also refund $500 million in October, said finance manager Patrick McCoy.
Next month the MTA, one of the largest municipal issuers with $37.5 billion in debt, plans to execute a mandatory tender and remarket $75 million of Subseries 2012G-3 and $56.9 million of Subseries 2002G-1h, both transportation revenue variable rate refunding bonds, because their current interest rate periods are set to expire.
Transportation revenue bonds are the MTA's workhorse credit. Orrick, Herrington & Sutcliffe LLP and Bryant Rabbino LLP are co-bond counsel, with Public Financial Management Inc. the financial advisor.
The MTA also intends to remarket $109.7 million of general revenue variable rate refunding bonds, consisting of $27 million of Triborough Bridge and Tunnel Authority Subseries 2005B-4a; $37.5 million of TBTA Series 2005B-4b; and $45.2 million of TBTA Subseries 2005B-4e.
In addition, the MTA expects to issue roughly $500 million of Series 2016D transportation revenue refunding bonds to refinance some debt the authority issued for transit and commuter projects. Jefferies is book-running senior manager together with co-senior managers Academy Securities Inc., Stern Brothers & Co. and Williams Capital Group LP. Nixon Peabody LLP and D. Seaton and Associates are co-bond counsel and PFM is financial advisor.
Speaking to the MTA board's finance committee members on Monday, McCoy called the $1.06 billion of Series 2016A Hudson Rail Yards trust obligations, which closed last week, a "one of a kind financing for MTA." Orders surpassed $3 billion, he said, and yields were lowered in all three maturities – 30, 35 and 40 years – after the order period closed.
The board in June authorized a bond offering to monetize a portion of the 99-year lease payments from Hudson Rail Yards commercial and residential development, which included an extension of the No. 7 subway line westward from Times Square. The authority said it will use proceeds to retire $500 million of transportation revenue bond anticipation notes, finance approved transit and commuter projects, and pay other financing costs associated with the transaction.
"It captured the significant value of the Hudson Rail Yard assets and favorable interest rates," said McCoy. "The structure of this transaction provided a unique credit opportunity for the investment community as was reflected in the market reception of the obligations."
Book-running senior manager Goldman, Sachs & Co. led the transaction. Nixon Peabody and D. Seaton were co-bond counsel and PFM was financial advisor.
All-in true interest cost was 4.28%, said McCoy, assuming the obligations stay out for the full term of 40 years.
"Quite frankly, we don't know how long they'll be outstanding because of the pace of development," McCoy told the committee. "It's a key factor in determining how long those obligations will be outstanding. But to the degree that they prepay, that TIC would come down to about 2.75%. We'll continue to monitor that and report back as changes warrant."
