New York’s Metropolitan Transportation Authority will begin its $500 million sale of Series 2013C transportation revenue bonds with a retail order period on Wednesday, with JPMorgan as lead manager.
The institutional sale is Thursday. Proceeds will benefit transit and commuter projects.
The MTA, one of the largest issuers in the $3.7 trillion municipal marketplace with $32 billion of debt, plans a $350 million follow-up sale for mid-June, with proceeds to redeem outstanding commercial paper notes. A letter of credit from RBC Capital Markets is set to expire June 30.
Moody’s Investors Service rates the bonds A2, while Fitch Ratings and Standard & Poor’s assign A ratings.
The authority is still assessing the costs from Hurricane Sandy damage. It sustained an estimated $288 million in operating losses and nearly $5 billion in infrastructure damage, mostly from corrosive salt. It has received nearly $1.2 billion from the Federal Transit Administration for repair and disaster relief work, and a further $3 million from the Federal Emergency Management Agency for bridges and tunnels.
Two weeks ago, the MTA said its New York City Transit division is launching a recovery and resiliency unit that will manage the rebuilding from Sandy, with an emphasis on protecting the system from water penetration. Interim executive director Thomas Prendergast, however, gave no cost estimates.
The MTA and the Connecticut Department of Transportation are also awaiting an investigation from the National Transportation Safety Board about a May 17 derailment and collision in Bridgeport between two trains on the New Haven line that injured 70 persons. No cost estimate is in yet. Connecticut typically pays for 65% of the cost of New Haven line improvements, with the MTA covering the remainder, although the breakout this time could be different.
Major projects in the MTA’s capital budget include the Second Avenue subway line construction, the Fulton Street transit center and East Side access for Long Island Rail Road trains.
According to Moody’s, other uncertainties that could strain the MTA’s budget include the outcome of labor settlements; resolution of a lawsuit challenging the payroll mobility tax, which provides $1.3 billion annually and is the MTA’s largest nonfare revenue source; and the authority’s modest liquidity relative to its variable rate and swap portfolio.
Hawkins, Delafield & Wood LLP is bond counsel. Lamont Financial Services Corp. is the financial advisor.