The New York State Liberty Development Corp. last week re-escrowed $2.59 billion of Liberty bonds for construction at the World Trade Center site due to unfavorable market conditions, according to a source familiar with the transaction.

The LDC sold the bonds in 2009 on behalf of developer Silverstein Properties Inc. It put the proceeds into escrow because the Liberty bond program was about to expire and the funds could not be used immediately.

The developer had expected to refund $1.31 billion of the bonds in December and re-escrow the remainder, but ­postponed the deal as interest rates ramped up.

The transaction has remained on the day-to-day calendar ever since. The bonds were subject to mandatory tender last week and were subsequently remarketed with a new mandatory tender date of April 28.

The bond proceeds were invested in U.S. Treasury state and local government series securities.

The Port Authority of New York and New Jersey owns the WTC site and leases a portion of it to Silverstein, which is currently constructing Tower 4. The $1.31 billion of bonds that will eventually be taken out of escrow will be used for the tower and are guaranteed by the Port Authority.

Silverstein Properties plans to build two more towers on the site.

Goldman, Sachs & Co. is the underwriter and Winston & Strawn LLP is bond counsel.

Congress created the Liberty bond program following the terrorist attacks of Sept. 11, 2001, to help revitalize Lower Manhattan with an $8 billion allocation of private-activity bonds.

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