New York's Metropolitan Transportation Authority plans sell up to $2.59 billion of bonds in 2009, the agency said yesterday.
That includes a projected issuance calendar approved by the finance committee yesterday and a previously approved issuance of $250 million The previously approved issuance began retail pricing yesterday and will price institutionally today. The full board will vote on the schedule tomorrow.
The MTA's Triborough Bridge and Tunnel Authority 2009A-2 bonds are in the market today and will be used to refund $200 million of variable-rate demand bonds sold in 2005 with a Depfa Bank PLC standby bond purchase agreement and will include a $50 million new-money portion.
Depfa was downgraded in the fall by all three ratings agencies.
"The bonds are really not marketable and they have been put back to the bank and we're paying a bank rate, which is somewhat punitive so we're trying to deal with that situation," finance director Patrick McCoy said.
McCoy attributed the trouble marketing those bonds to the market rejecting Depfa enhancement. Investors began putting the bonds back to the bank in the fourth quarter of 2008 and on Jan. 1 the MTA began paying a bank rate, which is the federal funds target rate plus 1.75%, McCoy said.
Because bonds have stayed at the bank for 90 days, they have "termed out," causing the principal of the bonds to accelerate to 10 years. The bonds were to have matured in 2032 and 2052, according to the notice of conditional redemption issued by the MTA. The first accelerated principal payment would be due in July.
The bonds maturing in 2032, reset at 1.49% in the first week of September but by the end of the month had reset to 7.8%, according to Bloomberg LP data. Rates further spiked in October, reaching 9.5% and have most recently reset at 6.35%.
The MTA also plans to sell $150 million of TBTA Series 2009A-1 bonds on Feb. 11 with a mandatory tender date of Jan. 20, 2010. The authority plans to sell bonds to refund those bonds in the fall.
Barclays Capital will serve as book-running senior manager and Loop Capital Markets LLC is co-senior manager. Nixon Peabody LLP is bond counsel and Goldman, Sachs & Co is financial adviser.
The issuance schedule resolution would authorize the MTA to sell $2.14 billion of new-money bonds and $200 million of refunding bonds in 2009, in addition to the $250 million in the market today. The MTA plans to be in the market with new money every month except April, June, and August.
The resolution distributed yesterday included language giving the MTA's finance staff authority to enter into swaps, but chief financial officer Gary Dellaverson said the resolution will be revised before the full board votes on it tomorrow with the swap provision removed. McCoy said the reason for the change was that the MTA doesn't anticipate entering into any swaps this year.
"The reality is we're not entertaining the idea of doing new swaps at this time so we decided to pull that from the resolution," McCoy said. Asked why the authority wouldn't keep the provision in the resolution in case it was needed, McCoy declined to elaborate.
Committee member Doreen Frasca voted against the resolution yesterday but declined to comment on her vote. In November, Frasca stated in a committee meeting that swaps should be subject to committee approval.
Also yesterday, the MTA announced dismal year-end results for its dedicated real estate tax receipts. The authority received $942.2 million of real estate taxes last year, more than half a billion dollars less than the $1.59 billion it received in 2007.