New York MTA lines up $930 million sale

Register now

New York’s Metropolitan Transportation Authority, amid a financial crisis caused by the COVID-19 pandemic, intends to sell $930 million of bonds as early as the week of April 27, according to a statement from senior manager Jefferies LLC.

“The size, timing, and structure of the potential transaction is subject to market conditions,” Jefferies said in a statement.

The planned sale involves roughly $680 million of fixed-rate Series 2020C climate bond certified transportation revenue green bonds and a $250 million remarketing of fixed-rate or term-rate Subseries 2015A-2 transportation revenue bonds.

According to the Jefferies statement, the MTA will be soliciting interest in both the tax-exempt and taxable markets. Co-senior managers and co-managers for the Subseries 2015A-2 issuance will be announced later. The transactions are expected to close around May 14.

MTA
New York MTA worker mops around a bench at Times Square station.

The Series 2020C proceeds, Jefferies said, will retire all or a portion of outstanding transportation revenue bond anticipation notes, Subseries 2018B-1; pay capitalized interest; and pay certain financing, legal and miscellaneous expenses.

Subseries 2015A-2 involves a remarketing of outstanding Securities Industry and Financial Markets Association floating-rate tender notes.

Amid the pandemic, stay-at-home requests, business closings and social distancing, all intended to neutralize the coronavirus pandemic, have triggered sharp ridership drops that have pummeled the MTA’s revenues and prompted three bond rating downgrades.

Moody’s Investors Service, S&P Global Ratings and Fitch Ratings lowered the authority’s primary transportation revenue bonds, its primary credit. Kroll Bond Rating Agency has those bonds under review for possible downgrade.

Moody's now rates the MTA's transportation revenue bond credit A2, while S&P and Fitch rate the bonds A-minus and A-plus, respectively. Kroll in late March revised the outlook on its long-term AA-plus rating of the TRBs to watch downgrade from negative.

The MTA stands to lose up to $8.5 billion this calendar year, according to a report by consulting firm McKinsey & Co. in conjunction with the authority’s capital construction chief, Janno Lieber. The MTA, which received $3.8 billion through the federal CARES Act rescue package, has requested another $3.9 billion from Congress to maintain operations for the rest of 2020.

“Credible estimates indicate that the need may be even greater,” leaders of 55 organizations said Thursday in a letter to the state’s congressional delegation. “An analysis released by some of our organizations on April 15 found the MTA’s shortfall may run from $4.4 to $8 billion. This problem deserves your utmost attention.”

The organizations included the business groups Association for a Better New York and Partnership for New York City; multiple labor organizations; and transit advocacy groups including Reinvent Albany, Straphangers Campaign, Tri-State Transportation Campaign and the Permanent Citizens Advisory Committee to the MTA.

Public transportation systems nationwide received $25 million under the federal CARES Act that Congress passed last month. An analysis by the civic organization TransitCenter said the package would provide “just months of financial breathing room” for agencies in large metro regions.

According to data on the Municipal Securities Rulemaking Board's EMMA website, a block of Subseries 2015A-1 fixed-rate transportation revenue bonds maturing in 2045 that originally priced at 117.23 cents on the dollar and a 3.04% yield sold to a customer Thursday night at a price of 102.375 cents and a 4.722% yield.

For reprint and licensing requests for this article, click here.