Roughly 7% of the debt portfolio of New York’s Metropolitan Transportation Authority is variable rate – well below its limit – said its finance director.

“We’re still principally a fixed-rate issuer,” Patrick McCoy told members of the MTA board’s finance committee on Monday.

Fixed-rate debt amounts to $31.24 billion, of 86% of the MTA’s debt portfolio, said McCoy. The fixed-rate portfolio includes $1.09 billion of bond anticipation notes.

“We continue to see opportunities in the fixed-rate market to lock in very low, historically low rates,” said McCoy.

MTA policy maximizes variable-rate debt at 25% of the aggregate principal amount of all of the authority’s outstanding obligations. Its board adopted that policy in 2004.

The authority is one of the largest municipal issuers with roughly $36.5 billion of debt.

Total debt excludes New York State and supported service contract bonds.

Variable-rate and synthetic fixed-rate debt each account for nearly $2.4 billion, while the authority is also holding $510 million of term-rate debt. Term-rate bonds have a fixed rate for a defined period that ends with a mandatory tender, but do not have a fixed rate for the entire life of the bond.

MTA officials expect to report to the board on synthetic fixed-rate debt in October.

Variable-rate debt includes about $1.93 billion in floating-rate notes, with $1.87 billion and $933.9 million in weekly and daily variable rate demand bonds, respectively, said McCoy. Those figures include the authority's synthetic fixed-rate debt.

Floaters feature interest rates based on a set spread to a floating index, such as the Securities Industry and Financial Markets Association or the London Interbank Offered Rate.

VRBD interest rates are determined periodically depending upon the interest rate mode. The remarketing agent sets the rate on each reset date and remarkets the bonds tendered. Bank letters of credit support optional tenders.

Unhedged variable rate debt has declined, said McCoy, from $2.72 billion in 2015 to the current $2.37 billion.

He said the average of weighted daily rates for MTA variable rate demand bonds as 0.94% for 2016.

Roughly $520 million of floating rate notes and $340 million of VRBDs have tender dates or letter of credit expirations this year, said McCoy.

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