New York plans to market new-money, tax-exempt personal income tax bonds next week for the first time since March.
The New York State Thruway Authority will offer $370 million of new-money debt and up to $120 million of tax-exempt refunding bonds to retail investors on Tuesday. Institutional pricing will follow on Wednesday.
Goldman, Sachs & Co is lead manager. Siebert Brandford Shank & Co. is special co-coordinating manager. Hiscock & Barclay LLP and the Law Offices of Joseph C. Reid are co-bond counsel. First Southwest Co. is financial adviser.
The bonds are expected to have serial maturities up to 20 years.
The Thruway Authority is one of five public authorities that sell PIT bonds on behalf of the state. Proceeds from the deal will be used to reimburse around 1,900 municipalities for expenditures on bridge, road, and other transportation projects under several state programs.
The state decided to go all tax-exempt with this sale, rather than use taxable Build American Bonds, because of the difficulty of compliance when dealing with so many municipalities.
The state will also offer taxable PIT bonds next week through the Dormitory Authority of the State of New York, which plans to market $133.5 million of qualified school construction bonds.
“We had to slightly compress our bond issuance schedule because of protracted budget negotiations,” Division of Budget spokesman Erik Kriss said in an e-mail. “So we will sell both taxable and tax-exempt bonds next week since these markets do not compete with each other.”
When the state last sold PIT bonds in May, the entire $800 million issuance was sold as BABs.
New York has sold more PIT bonds as BABs this year than as tax-exempt. The state sold $4.13 billion of PIT bonds in 2009, including new money and refundings, as tax-exempt. That compares with $1.62 billion of BABs, which can only be issued as new money, according to Thomson Reuters.
This year the state has sold $366.3 million of tax-exempt PIT bonds compared with $990.6 million of BABs.
PIT bonds are the state’s primary debt-issuance vehicle. The bonds are secured by a pledge of 25% of state income tax receipts. New York has sold $23.45 billion of PIT bonds since the credit was introduced in 2002, according to Thomson Reuters.
Standard & Poor’s rates the PIT bonds AAA. Fitch Ratings rates them AA.