Nassau County bond sale continues its fiscal momentum, NIFA says

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A successful $405 million borrowing executed by Long Island's Nassau County last week helps maintain its financial progress toward exiting a nearly decade-long state control period.

New York State’s sixth-most populous county, which has had its finances controlled by the Nassau Interim Finance Authority since 2011, attracted nine bidders for a competitive sale on Dec. 2 that featured $105 million of Series 2019 B general obligation bonds. The deal also drew a high number of bids for $80 million of Series 2020 A revenue anticipation notes, $120 million of Series 2019 A tax anticipation notes and $100 million of Series 2019 B TANs.

Nassau is using proceeds from the GO sale to refinance BANs sold in 2018 for the purposes of financing various sewer system improvements and to fund future capital projects. The large suburban county is utilizing RAN and TAN proceeds for cash-flow purposes.

"Nassau County's recent sale of general obligation bonds reflects a marked improvement from previous offerings," said NIFA spokesman David Chauvin. "NIFA is encouraged to see the county moving in the right direction."

The Dec. 2 Nassau County bond transaction came two weeks after NIFA approved a $3.11 billion 2020 budget that the state control board said represented “incremental progress” toward achieving structural balance despite projecting a $47.8 million deficit next year. NIFA cautioned, however, that budget gaps could rise to $74 million in 2021, $140.6 million in 2022 and $190.1 million in 2023 due to potential mismatch between baseline operating revenues and expenditures.

Jefferies LLC won the county’s bid for its Series 2019 B Bonds with a true interest cost of 3.237%. The second place bid for the bonds maturing in 2020 through 2049 came from UBS Financial Services at 3.243%.

The Series 2020 A RANs maturing on Dec. 9, 2020, attracted nine bidders with Morgan Stanley & Co LLC winning at a net interest cost of 1.190%. The next highest bid from BNYMellon Capital Markets was 1.242%.

The county’s Series 2019 A TANs that mature on March 16, 2020, brought in seven bidders with Morgan Stanley & Co. LLC winning at a net interest cost of 1.177%. J.P. Morgan Securities LLC was the cover bid at 1.180%.

J.P. Morgan beat out seven other bidders for Nassau’s Series 2019 B TANs that mature on Sept. 14, 2020, with a net interest cost of 1.177%. The cover bid from BNYMellon Capital Markets was 1.198%.

“We’re pleased with the level of interest in our sale,” said Ray Orlando, who is deputy county executive for finance under Nassau County Executive Laura Curran. “As Nassau County continues to work toward exiting the NIFA fiscal control period declared in 2011, the Curran administration is confident that we are moving in the right direction.”

Nassau County’s GO bonds are rated A2 by Moody’s Investors Service, A by Fitch Ratings and A-plus by S&P Global Ratings. The suburban county, located just outside New York City, has around $2.4 billion of outstanding bonded debt, according to Fitch.

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Primary bond market County of Nassau, NY Nassau County Interim Finance Authority New York