Variable-rate debt represents only 7% of New York Metropolitan Transportation Authority’s $36.7 billion debt portfolio, its finance manager said.
That amount, $2.72 billion, is well under the authority’s threshold of 25%, Patrick McCoy told the MTA board’s finance committee in lower Manhattan on Monday.
“We have a very diversified portfolio of variable rate debt,” McCoy said in his
Unhedged variable rate debt has remained constant since 2008, he added.
Among the $5.1 billion in variable- and synthetic fixed-rate combined, $2.8 billion in variable-rate demand bonds is outstanding. The MTA is also carrying $2 billion in floating rate notes, in which the interest rate is based on a set spread to a floating index, either Securities Industry and Financial Markets Association or London Interbank Offered Rates.
“That product has really been quite effective in allowing us to avail ourselves of the short end of the yield curve,” he said of the floaters.
While the MTA has divested most of its auction-rate securities, which have been failing since the beginning of the credit crunch in 2008, it still has $252 million in ARSs , “a small sliver of them that are performing well,” McCoy said. He said a contingency is in place should interest rates spike.
Fixed-rate debt totals $31.3 billion, or 85%, according to McCoy. That includes $1.9 billion in bond anticipation notes.
According to McCoy, the MTA next month expects to issue $500 million of Series 2016B dedicated tax fund green bonds to pay off outstanding 2015A bond anticipation notes. Authority officials expect to mail disclosure May 10, he said.
The authority in February sold $782.5 million of transportation revenue green bonds. It was the MTA's inaugural green issuance, the largest U.S.-certified green bond to date and the first U.S. municipal bond certified under new international criteria for investment in transport infrastructure.
McCoy also said finance officials expect to recommend to the board its selection for underwriter and financial advisor in September and October, respectively, after several months of interviews and scoring. The authority issued requests for proposals for both.
Underwriter RFPs were due Tuesday. “We’re expecting a significant submission,” said McCoy.
