New York City will go to market next week, selling more than $1 billion in general obligation bonds, mostly through negotiation.
The total will reach an estimated $1.42 billion by mid-March.
A two-day retail order period will begin Monday for the sale of roughly $520 million of new money bonds and $250 million of refunding bonds, both fixed rate, and $122 million to be converted from variable rate demand bonds to fixed rate. All are-tax exempt. The institutional sale is set for Wednesday.
Morgan Stanley is bookrunning senior manager. Co-senior managers are Bank of America Merrill Lynch, Citi, JPMorgan, Jefferies, and Siebert Brandford Shank & Co.
The city will also convert $248 million of VRDBs to step-coupon floating rate notes on Tuesday. Siebert Brandford Shank will lead the sale of $100 million of the converted bonds, and Loop Capital Markets LLC and RBC Capital Markets will each lead a sale of the $74 million of the converted bonds.
Additionally, the city intends to sell $100 million in taxable, fixed-rate new money bonds through competitive sale on Wednesday and $179 million in tax-exempt VRBDs around March 18.
Fitch Ratings and Standard & Poor’s assign AA ratings to the city’s GO bonds, while Moody’s Investors Service assigns its Aa2 rating.
In December, the city upsized its GO refunding sale to $1 billion from $850 million, citing investor demand. It received $146 million of retail orders over two days.
As of Dec. 31, the city had $41.3 billion of debt outstanding. Fixed-rate, tax-exempt bonds accounted for $26.6 billion, or roughly 64.5% of that total, while variable rate tax exempt and fixed rate taxable amount to 18.2% and 16.7%, respectively.
Mayor Michael Bloomberg last month introduced a $70.1 billion preliminary budget for fiscal 2014, which the 51-member City Council must approve by the end of June. The city-funded portion is $50.7 billion.
"The city's sound approach to budget development features conservative revenue and expenditure forecasting and effective budget monitoring," Fitch said in a report Friday afternoon. "Management is thus able to react quickly to changing conditions through periods of economic stress, constrained state aid and rising spending pressures."
The city saved roughly $60 million during a month-long school bus strike that ended last Monday. According to schools Chancellor Dennis Walcott, the city spent about $20 million on MetroCard transit fares, gas and taxi expenses while saving $60 million from not paying bus companies.