New York City plans to jump into the taxable Build America Bond market next week with $800 million of general obligation debt, city officials said yesterday.

In addition to the BABs, the city plans to market $130 million of traditional taxable debt and $900 million of tax-exempt refunding bonds.

The city has not announced the date of the sales other than a retail order period of an undefined length for the tax-exempt bonds that will begin on Friday.

"We're probably well-served to have waited," said Alan Anders, deputy director for finance.

As issuers across the country have sold BABs like hotcakes this year, the city held back to study the emerging market and to complete its request for proposals process for underwriters, which it did last month. Spreads to Treasuries on new issues and the bid-ask spreads in the secondary market have tightened since the first BAB deal priced in April.

By waiting, the city will now be able "to get the benefit of the tighter spreads," Anders said.

The structure of the debt sales have not been finalized, but unlike many BAB sales that have concentrated their maturities on the long end, the city's BABs will have shorter as well as longer maturities to comply with state finance laws, Anders said.

Morgan Stanley will lead manage the BABs and traditional taxable deal. Bank of America-Merrill Lynch will lead manage the tax-exempt refunding.

A.C. Advisory Inc. and Public Resources Advisory Group are financial advisers on the deal. Sidley Austin LLP is bond counsel.

The city has sold $45.17 billion of GO bonds since 2000, of which $34.48 billion was new money and $10.68 billion was refunding, according to Thomson Reuters.

Anders said the city may issue BABs through the New York City Transitional Finance Authority and the New York City Municipal Water Finance Authority in the future.

The city has reached out to both traditional investors in city debt and new investors for the BABs.

Fred Yosca, managing director and head of trading at BNY Capital Markets Mellon, said the large size of the BAB deal should make it attractive to pension funds.

"The city issues large tranches of bonds - it make sense for them to issue BABs because they're going to attract large taxable buyers," Yosca said. "A big pension fund isn't going to buy from a little issuer."

New York City's GOs are rated AA by Standard & Poor's, Aa3 by Moody's Investors Service, and AA-minus by Fitch Ratings.

Like other municipalities, the city has had to adjust to falling revenues in the recession, but the city has been lauded for its quick reaction.

"Their overall budget management and long-term financial planning have served them very well," said Standard & Poor's analyst Robin Prunty.

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