A New York public benefit corporation will hit the municipal bond market for the first time in nearly six years this week to save money with lower interest rates.
The New York Local Government Assistance Corporation is slated to issue $247 million of series 2018A refunding bonds on Thursday, marking its first transaction since May 2012. Public Resources Advisory Group is financial advisor for the competitive deal. Hawkins Delafield & Wood LLP and Pearlman & Miranda, LLC are both bond counsel on the planned sale.
"This refunding will allow LGAC to take advantage of the current low interest rate environment for savings,” New York State Deputy Comptroller Robert Ward said in a statement.
LGAC, which was established in 1990 as part of a New York State fiscal reform program to issue bonds for public services funding, only went to market five times between 2009 and 2012. The agency, which has no taxing power, last sold $86.8 million of refunding bonds in a deal led by Goldman Sachs. It has borrowed $4.2 billion since 2003, according to Thomson Reuters.
Debt service on LGAC bonds is backed by revenues derived from state sales and compensating use taxes of which 1% is deposited into a Local Government Assistance Tax Fund. The preliminary statement said that New York State is not bound or obligated to appropriate monies into the tax fund or to continue the required sales and use taxes. New York general bond resolutions adopted in 1991 and 2002 contain promises that LGAC bondholders have first priority on the tax dollars available to LGAC for debt service.
S&P Global ratings affirmed LGAC’s AAA rating ahead of the deal, and Moody's Investors Service its Aa1 rating. Its outstanding debt is rated AA-plus by Fitch Ratings, according to the LGAC.
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Updated March 13, 2018 at 10:20AM: The story was updated with the Moody's rating action.