New York City set a record for international orders on its $1.23 billion general obligation deal that priced on Thursday. Foreign buyers placed orders for $123.1 million of taxable Build America Bonds, Comptroller John Liu reported.
In previous sales, international orders on the city's GO BABs totaled an aggregate $54 million, according to the comptroller's office.
This week's deal included $775 million of BABs, $300 million of tax-exempt refunding bonds, and $150 million of traditional taxable bonds. The city also converted $88.6 million of variable-rate bonds to fixed rate due to expiring letters of credit.
The BAB portion of the deal was upsized from $650 million due to higher demand while the refunding was downsized from $500 million.
Liu, along with staff and a banker from Bank of America Merrill Lynch, the book-runner on the BABs, were in London on Thursday marketing the bonds to foreign institutional investors. Investors included firms with that needed to use the securities to back annuities or insurance policies, he said.
Overseas "investors are just looking for high quality fixed-income products," Liu said in a phone call from London. "There seems to be some appetite for dollar instruments in London as opposed to sterling, or euro."
Liu said New York City bonds offered foreign investors "unparalleled quality." There hasn't been much international interest in the city's bonds until it began selling BABs last year and interest has grown this year, he said.
"The city has had a few international investors participate in our BAB sales and there were several more on this sale," Office of Management and Budget spokesman Ray Orlando said in an e-mail. "The city is always looking to attract as many investors as possible to all of our sales, including international investors for BABs."
Moody's Investors Service rates the bonds Aa2. Standard & Poor's and Fitch Ratings rate them AA. All have stable outlooks.
The BABs priced with maturities from 2019 to 2037. On the long end, the bonds yielded 5.517%, 180 basis points above U.S. Treasuries, according to the pricing wire. The city sold $142 million of tax-exempts and $143 million of BABs to retail investors.
Liu's road show travels next to Zurich then Ireland, he said.
"The goal is to expand our market access to possibly improve liquidity and to lower the cost of borrowing for our taxpayers," Liu said.
In 2010, the city has sold $3.66 billion of BABs on its three credits — GO, New York City Transitional Finance Authority future tax secured, and New York City Municipal Water Finance Authority — making BABs 66% of the city's bond deals this year, the comptroller's office said.