The New York City Housing Development Corp. intends to sell $655 million of capital fund grant program revenue bonds in two series on Wednesday, following a one-day retail period.

JPMorgan Securities LLC is the lead manager.

Series A will refund about $184 million of capital fund housing bonds issued in 2005, and Series B, roughly $471 million, will finance necessary capital improvements for 39 New York City Housing Authority developments.

The bonds will have 12- and 20-year terms, respectively.

The pledged federal public housing modernization funds that the authority receives annually from the U.S. Department of Housing and Urban Development secures the bonds. HUD’s capital funding formula, established under a 1998 federal law, determines how much the authority receives.

Standard & Poor’s rates both series AA-minus. S&P cited the strong HUD security, 4.3 times anticipated bond debt-service coverage and a fully funded debt reserve fund. Debt-service coverage, according to S&P, reflects the 5% sequester federal funding reduction, followed by a 4% compounded reduction in available capital funds due to appropriation risk and an additional 5% annual cut due to potential funding reallocations.

The rating company pointed to congressional budget cuts as an offsetting factor.

“Although [debt service coverage] is at least 4.3 times issuance, the past several years have seen reductions to overall capital fund appropriations,” S&P said in its report. “Given the current economic climate and record budget deficits, we recognize that Congress is facing added pressure to reduce the federal deficit, particularly by limiting domestic discretionary spending.”

Hawkins Delafield & Wood LLP is the corporation’s bond counsel. Ballard Spahr LLP is representing the authority. Winston & Strawn LLP is representing the underwriters.

The 32-year-old corporation issued $1.8 billion of bonds in calendar year 2012, and has devoted a further $1.8 billion in direct subsidy from its corporate reserves.

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