Loop Capital Markets LLC will lead manage the sale of $475 million of New York City fixed-rate tax-exempt general obligation bonds — its first sale of 2008 — with a three-day retail order period beginning Thursday. The deal will be the first New York City deal on which Loop will be book-running senior manager.

In addition to the tax-exempt fixed-rate debt, the city also plans to competitively sell $75 million of of fixed-rate taxable bonds on or about Feb. 12 and $100 million of variable-rate demand bonds on or about Feb. 28, according to information from city finance officials.

While city officials are confident in New York’s ability to sell debt in the current challenging market, they are making some changes in process as a result.

The city is taking bids for insurance on the fixed-rate bonds, but only from “a couple of firms” said deputy city comptroller for public finance Carol Kostik, declining to identify which ones.

New York City will continue to use a three-day retail order period on this deal, as it did on its last two bond sales. However, a decision to stop selling debt in auction rate mode means it will issue variable-rate demand bonds on the variable-rate portion of the February sale. Bank of America will serve as remarketing agent on the VRDBs and provide liquidity through a standby bond purchase agreement.

About the selection of Loop as lead manager in the current market, Kostik said: “This looked like a transaction where we thought they could do a great job. They have demonstrated good underwriting in other situations including difficult markets with other clients.”Loop was one of three underwriting firms selected from a 2006 request for proposals for syndicates for the city’s credits that were eligible to lead manage the sale if they demonstrated the ability to do so. Ramirez & Co. and Banc of America Securities LLC were also in that bracket and Ramirez lead managed its first sale for the city last summer.

Last year, Loop was lead manager or co-senior manager on 15 deals totaling $2.23 billion, according to Thomson Financial data.

Calls to Loop on Friday were not returned.

Bear, Stearns & Co., Citi, Merrill Lynch & Co. and Morgan Stanley will serve as co-senior managers on the tax-exempt fixed rate portion of the deal.

Sidley Austin LLP is bond counsel and Public Resources Advisory Group and A.C. Advisory, Inc. are co-financial advisers on all the bonds.

The city last year sold $4.2 billion of bonds on its GO credit which included $2.2 billion of refunding, according to Thomson Financial.

Kostik said the upcoming deal’s timing and size was driven by the city’s capital program needs rather than anything going on in the market. The city uses bond proceeds to reimburse the general fund for capital expenditures.

The city expects strong demand for its bonds, she said.

“We’re a double-A credit and we’ve experienced very strong demand for our bonds even in difficult times,” Kostik said. “We did a deal in December in a very difficult market and still had very strong retail and institutional demand. We’re not concerned about the demand for our bonds.”

The deal comes to market as New York is coping with a financial services industry in turmoil. Wall Street profits in 2006 reached $20.9 billion, the second best year ever, according to office of management and budget documents. Market turbulence in the second half of 2007 cut those profits down to an estimated $2.8 billion.

Multi-billion budget surpluses the city generated with conservative budgeting practices during recent years of booming real estate and financial markets now could shield it from some of the pain stemming from multi-billion dollar write-offs of losses related to subprime mortgage securities and subsequent layoffs in its biggest industry.

“Certainly by recognizing certain revenue sources as extraordinary and by dedicating those additional revenues largely to paying down debt early, for examplereducing the out-year gaps upfront, the city has put itself in a better position to weather uncertainty,” said Moody’s Investors Service analyst Nick Samuels. “While 2007 bonuses were down compared to 2006, they’re still large. A lot of the financial market turmoil came toward the end of the year and what’s really not certain is how revenue is going to be affected in the next year.”

Moody’s rates the city Aa3. Standard & Poor’s assigns it aAA rating, while Fitch Ratings rates it a AA-minus.

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