The Nassau County Interim Finance Authority yesterday approved the sale of about $235 million in bond anticipation notes, which will begin selling Dec. 13, with Goldman, Sachs & Co. as the lead underwriter on the deal.
The amount of the deal is flexible and could be adjusted as the sale date approaches, a NCIFA official said.
Revenue raised from the sale of the notes will provide cash flow to the financially beleaguered county and will serve as a substitute for Nassau's annual tax anticipation note issue.
The authority was created by the state earlier this spring to help the county steer its way out of its fiscal crisis. Along with paying $100 million over five years in direct state aid, NCIFA aids the county by helping to refinance its debt to reduce its immediate debt service burden.
"That was a major component of NCIFA's legislation when it was adopted," said Michael Larkin, deputy press secretary for the Nassau County Legislature.
In this instance, Nassau will benefit from the authority taking over the county's issuing responsibilities, since the county's long-term debt is rated at near junk bond status. The authority's credit, however, is significantly better. Standard & Poor's, for instance, rated NCIFA's $260 million sales tax bonds AA-minus in October, but rates Nassau's credit BBB-minus with a stable outlook.
"With NCIFA, we can definitely borrow at a cheaper rate," said Larkin. "That's one of the major pluses of having NCIFA."
But there are other pluses as well.
Borrowing through NCIFA "enables the county to not use a letter of credit," said NCIFA chief financial officer Carol Kostik, who noted that a letter of credit would otherwise be needed for the county to borrow on its own.
The notes can be repaid with future authority bond sales, along with a subordinate lien on the county's sales tax revenues. Kostik added that the notes could also be repaid with other general county revenues.
